Orange juice price analysis: expect juicy returns ahead

Orange juice price continued its bullish momentum this week as investors focused on the changing demand and supply dynamics. Data by TradingView shows that the price of frozen orange juice concentrate surged to about $500, higher than the year-to-date low of $290. It has soared by over 440% from its lowest point in 2020.

Demand and supply dynamics

The price of orange juice has skyrocketed in the past few years amid the ongoing demand and supply dynamics. The industry has remained in a supply deficit because of weather-related events and disease in key countries like the United States and Brazil.

In the US, the industry is still reeling from Hurricane Irma, which happened in 2017 destroying most of the orange trees in the country. Production has been in a strong downward trend since then and it will remain in a deficit.

The most recent data showed that Florida’s orange production has continued dropping. All orange production dropped by 5% from its March forecast and the trend may continue in the coming years.

There are signs that many orange farmers in Florida have started to plant more orange trees to take advantage of the recent price. However, unlike crops like corn and soybeans, it takes more years for orange groves to start producing.

The other challenge for orange is that Brazil, the biggest orange producer is going through major challenges. Most recently, a report by Rabobank noted that over 40% of all orange trees in the country are suffering from greening. This is a serious disease that ultimately kills the orange tree.

Brazil farmers have also struggled because of higher temperatures and lower rainfall levels in the past few years. As I have written before, analysts expect that orange production in Brazil fell by a quarter in Q1 to 232 million boxes. 

Therefore, many orange-producing companies are considering alternatives, with Japanese firms moving to mandarins. It is unclear whether this transition will work out in the long term. 

Orange juice price forecast

Orange chart by TradingView

The weekly chart reveals that the price of orange juice has been in a strong uptrend in the past few years. It has soared from about $90 in 2020 to almost $500. Most recently, it has soared above the crucial resistance point at $428.45, its highest swing in March this year. It has now invalidated a double-top pattern. 

Orange juice has surged above the 50-week and 100-week Exponential Moving Averages (EMA). Oscillators like the Relative Strength Index (RSI) and the MACD have continued rising, signaling that it has a bullish momentum.

Therefore, orange has more upside as the supply deficit continues. If this happens, the concentrate’s price will jump to about $550 in the coming months.