Global Orange Juice Prices Surge – Here’s Why

The cost of our morning orange juice has recently been soaring, and now we finally have an explanation for the price hikes that reveals a problem that has been bedeviling the juice industry for at least three years.

Closing futures prices of benchmark frozen concentrate juice peaked at $4.87 a pound May 28 on the Intercontinental Exchange in New York, CNBC reported, nearly twice the price last year. That price had dropped to $4.09 by Tuesday, but still far higher than a year ago.

The biggest cause of the jump are problems in the orange groves of Brazil, which account for 70 percent of the oranges used to manufacture orange juice globally.

This year’s harvest looks like it will weigh in at 24 percent less than last year’s, CNBC reported. That’s contributing to a shortage that’s been hitting the citrus industry for three years, according to Business Insider.

The primary culprits, according to CNBC, are heatwaves in Brazil at critical points in the orange production cycle as well as citrus greening disease that has wracked citrus growers around the world.

According to the USDA, the disease is the one of the worst known for citrus trees. The trees that become infected always die in a few years and there is currently no cure.

The disease is insect-borne, spread by a tiny insect called the Asian citrus psyllid. The insect has also been spreading the disease in the U.S. and has been seen throughout Florida, Georgia, Puerto Rico and the U.S. Virgin Islands. It has also been detected in parts of Alabama, California, Louisiana, South Carolina and Texas, according to the USDA.

The disease is equally devastating to oranges, lemons, limes, tangerines, and grapefruits.

Once infected, the tree will produce less fruit over time, and fruits that do grow will be partially green, smaller, shaped irregularly, and will taste bitter. Leaves may show asymmetrical, blotchy mottling.

Eventually the tree will more or less stop producing any fruit and will then die. Also, making it harder to catch, an infected tree will look asymptomatic for several seasons before becoming obviously afflicted.

The disease is not the only pressure on the citrus-growing industry, either. Hurricanes have had seriously ill effects on U.S. orange growers, too.

“There’s great concern for the citrus crop in Florida this year, given our hurricane forecast,” said Dale Mohler, AccuWeather’s senior commodity meteorologist, according to The Food Institute, a New York-based information source on the food-production industry.

“We are forecasting an above-average number of storms, which means the odds of a hurricane rolling through the groves is greater than usual,” Mohler said.

Unfortunately, some of the solutions to the lack of orange stock tends to drive up costs.

One such solution is to add other citrus — especially mandarin oranges — to juices, according to the U.K. Guardian, but this forces producers to implement different processing practices because mandarins and other citrus taste different from regular juicing oranges. The extra processing practices drives up costs to manufacturers, which drives up prices to consumers.

Meanwhile, manufacturers would be required to alert customers that they are producing blended juices and that could drive down customer demand, which could lower sales and, in turn, stifle the expansion of groves with new trees.

With all this in the offing, producers are already anticipating higher costs for the near future, and are beginning to retool the whole industry to bring closer cooperation to save money between all the portions of the orange juice producing industry, including growers, food handlers, fruit processors, blending houses, juice packers and soft drink producers.

Jena Santoro, senior manager, intelligence solutions at Everstream Analytics, told The Food Institute the cost of orange juice is only the latest price hike plaguing consumers.

“Most recently, we’ve seen shortages of household items like sugar, tea, and coffee around the world due to similar trends in weather-related production and harvest issues,” Santoro said. “This has led to a buying spree of coffee beans by roasters to ensure sufficient reserves,” which “pushed up the prices for end-consumers.”

Finally, all these pressures don’t even include the rising costs thanks to President Joe Biden’s inflationary economic policies.