Orange juice prices hit record
- 11 January 2012
- From the section Business
The price of orange juice on the global markets has hit a record high, after surging over the past few days.
Traders say the main reasons are safety concerns about juice from Brazil, the world's largest producer of orange juice, and cold weather in Florida.
The US Food and Drug Administration said carbendazim, a fungicide, has been found in shipments from Brazil.
Orange juice has risen by about 25% since the beginning of the year, to $2.12 a pound.
Carbendazim is banned in the US, but is used legally in Brazil to treat black spot, a type of mould that grows on trees.
"Consumption of carbendazim at the low levels that have been reported does not raise safety concerns," the FDA said in a letter published on its website.
The FDA said any orange juice which could be a risk to the public would be removed from supermarket shelves.
The FDA said it would "deny entry to shipments that test positive for carbendazim".
That is what has spooked the market.
In 2010-11, Brazil produced more than half of the world's orange juice, according to figures from the US Department of Agriculture.
"We could have quite a shortage of product on the global market," Michael Smith, the president of T&K Futures and Options based in Florida, told the BBC World Service.
The US is the second-largest producer of orange juice, with production mainly concentrated in Florida.
A few days of cold weather in Florida has led to ice being found in some fruit and damage to tree leaves.
"We had two nights in parts of Florida where we had below zero temperatures. That will definitely cause damage," said Mr Smith.
The market for orange juice is relatively small, compared with other commodities such as coffee and cocoa.
So large price movements can happen suddenly, say analysts, but Tuesday's was regarded as dramatic.
"If we take Brazilian OJ out of the market, it has not reached its peak certainly. We're in uncharted waters," said James Cordier, president of Liberty Trading Group in Florida.