Orange Juice Enjoys Explosive Rally That Beats Even Crude Oil’s Surge
Investing.com | Mar 15, 2019 19:23
America’s favorite citrus is exploding off the charts.
From a gloomy headline like “Orange Is the New Red ” by Bloomberg two months ago, when prices were hitting 2016 lows, orange juice futures have suddenly flipped into uncharted bullish territory, with smaller-than-expected fruits and worries of dry weather turning pessimistic investors into buyers.
The turnaround has been nothing short of stunning.
h3 A Rally Three Times More Powerful Than Oil’s/h3OJ is on track to a 12% gain on the week, a rally almost three times as strong as that of crude oil.
Orange juice futures lost a combined 9% in the first two months of this year, due to a bounty crop. In December, it suffered an even bigger plunge of 13%.
But with the current rally—it’s biggest in three years—it is now showing a modest year-to-date gain.
And technical charts suggest things could get better.
At Thursday’s settlement, the front-month May OJ contract on ICE Futures U.S. closed at $1.2493 per lb.
h3 Technical Analysts See OJ As A 'Strong Buy'/h3Technical analysts on Investing.com are recommending May OJ as a “Strong Buy”, pegging its strongest upside potential at $1.3171—or another 5% above current levels.
The irony isn’t lost on commodities chart-watcher and independent trader Mike Seery, whose response to this week’s rally was a blog entitled: “What is going on with orange juice?”
The founder of Seery Futures in Plainfield, Illinois, said:
“I have been talking about the orange juice market for quite some time as the breakout occurred above the $1.2280 level.”
“However prices ran up so quickly, I was hesitant to get suckered in, so I'm still sitting on the sidelines.”
Seery added that, should the $1.22 level return, he would be a buyer.
While a bottom certainly seems to have formed on OJ, Seery also suggested that longs place a stop-loss under the $1.1490 multi-year low as exit strategy, should the market turn direction.
h3 Pressure Could Increase If Crop Weather Stays Good/h3So, what are the weather fundamentals for OJ, and can they trip up the market again?
Jack Scoville, analyst for soft commodities at The Price Futures Group in Chicago, said the orange harvest in top growing state Florida remained active but the weather was mostly dry.
Get The App
Unseasonably warm, or even cold weather, can result in dry oranges as trees under stress work to repair such conditions before improving their yield.
Scoville said fruit availability was abundant in Florida but added that producers were seeing both “small sized to good sized” oranges, and irrigation was being used all over to overcome the dry weather.
Flowering for the next crop was ongoing, he said, and new fruit was starting to form on some trees. Good weather conditions were also reported in top citrus growing country Brazil, Scoville pointed out, and some beneficial rains were expected there this week—a sign that the market could come under selling pressure again if such benign conditions continued.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.