Easing concerns about freezing temps in Florida send orange juice futures lower

By Stephen Bernard, AP
Thursday, January 7, 2010

OJ futures fall as Florida avoids a major freeze

NEW YORK — Orange juice futures contracts retreated Thursday after much of Florida avoided a potentially devastating freeze overnight.

Orange juice contracts for March delivery fell 90 cents to settle at $1.4115 per pound, a day after hitting a two-year high of $1.4965 per pound.

Prices for frozen orange juice concentrate had risen sharply this week as investors became concerned that a blast of cold weather plunging into Florida would hurt the orange crop. The contract rose 10 percent during the first part of the week.

“We’ve had a couple of cold nights,” said Andrew Meadows, a spokesman for the Florida Citrus Mutual, a trade group representing citrus farmers in Florida. “We do expect isolated damage, but there’s been nothing catastrophic.”

Temperatures in parts of the state dipped into the mid-20s Wednesday night, Meadows said. Orange trees can be destroyed when temperatures fall below 28 degrees for at least four hours, causing fruit to freeze and leaves and branches to break.

The weather is expected to warm up slightly for a couple of days, easing concerns about crop damage. However another round of freezing temperatures are expected this weekend.

“We’re not out of the woods yet,” Meadows said. Temperatures are expected to fall into the 20s in parts of the state again on Saturday and Sunday night.

The cold snap came just as the orange crop season was peaking. Significant losses to the crop for fresh fruit would send prices of frozen orange juice concentrate sharply higher.

Cold weather across much of the country had also driven up energy prices in recent days as more people were expected to turn up the heat to warm their homes. Energy futures also fell Thursday.

Benchmark crude for February delivery fell 52 cents to $82.66 a barrel on the New York Mercantile Exchange as the dollar rebounded.

In other Nymex trading in February contracts, heating oil fell 1.96 cents to $2.1836 a gallon and gasoline dropped less than a penny to $2.1349 a gallon. Natural gas futures fell 20.3 cents to $5.806 per 1,000 cubic feet.

Meanwhile, grain prices declined while metals were little changed.

Soybeans for March delivery tumbled 33 cents to settle at $10.26 a bushel.

Jason Ward, a market analyst with Northstar Commodity in Minneapolis, said the sell-off was just profit taking after contracts for the beans had a big rally in recent weeks. The heavy sell-off began overnight during trading in China, he said. U.S. markets just continued that trend into Thursday, Ward added.

Soybeans rose eight straight days, climbing 82 cents a bushel before starting to backtrack. They rose as high as $10.7475 in trading Monday.

Wheat fell 9.5 cents to 5.5775 a bushel. Corn declined 4.25 cents to $4.175 a bushel.

Gold for February delivery fell $2.80 to settle at $1,133.70 an ounce, while silver for March delivery rose 17 cents to $18.345 an ounce. March copper eased off record highs, declining 6.75 cents to $3.4270 a pound.

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