Orange juice price retreats as Brazil harvest season gets underway

Orange juice price has pulled back after soaring to the all-time high of $295.82 in May. Data compiled by Investing shows that orange juice was trading at $274, meaning it has dropped by more than 7.5% from its highest point this year. In all, orange juice is the third-best performing commodity this year after coffee and feeder cattle.

Demand and demand dynamics

Orange juice is a leading commodity that is consumed by millions of people every day. Most of the oranges consumed today comes from Brazil, which produces ver 16 million tonnes of oranges every year. It is followed by China, US, India, and Mexico.

Orange juice price has been in a strong bullish trend in the past few years, as I wrote here. In all, the price has jumped by more than 100% in the past ten years and by over 120% in the past 3 years. This rally is mostly because of the overall decline in US orange production.

About 70% of all orange juice produced in the United States come from Florida, a state that has gone through several hurricanes in the past few years. In 2022, the state suffered Hurricane Ian and in 2017, it went through Hurrucan Irma. These hurricanes have led to a dip in production, with estimates saying that Irma led to 30-90% drop in crop.

There are also concerns about orange supply from Brazil. In a report published in May, Fundecitrus said that orange output in Brazil will be 303.90 million boxes. That is about 1.9% decline from the previous year.

The recent decline of orange juice prices is likely because of seasonal factors since supplies increase in this time of the year, which is the harvest season.

Orange juice price forecast

Orange juice chart by TradingView

The daily chart shows that orange juice peaked at $296.90. It has now pulled back and moved below the important support level at $287.56, the highest point on April 4th and April 25th. The Relative Strength Index (RSI) has drifted below the overbought level.

Orange juices have moved above the 25-day and 50-day moving averages. Further, the price has formed what looks like a triple-top pattern. Therefore, the price could continue falling in the near term as sellers target the key support at $239.37. A move above the resistance point at $295.40 will invalidate the bearish view.