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Column: Orange juice prices sour

Breitinger

Orange juice sank to the lowest price in more than 18 months on Wednesday, squeezed lower by a supply overhang and lack of investor interest in the commodity.

Prices spiked higher in January amidst concerns that a fungicide in Brazilian orange juice could halt imports from that country. Since then, the USDA has assuaged fears, allowing the free flow of Brazilian OJ to the United States. Furthermore, this winter was relatively benign, with little damage to Florida’s orange crop because of freezing, a threat that looms over the market each winter.

As a result of the healthy supply levels, prices have been sliding since January, dropping more than 88 cents per pound, or 38 percent. OJ prices have also been undercut by a continued decline in U.S. consumer preference for orange juice; U.S. consumption has fallen nearly 11 percent during the last year.

The orange juice futures contract is traded in New York and represents 15,000 pounds of frozen concentrated orange juice, equivalent to nearly 16,000 canisters the average consumer might buy in the grocery aisle. As of midday Friday, frozen concentrated orange juice for delivery in May was trading near $1.46 per pound.

Looking forward, OJ traders expect few threats to the orange crop until hurricane season this summer.

Natural Gas Makes Ten-Year Low

Natural gas prices fell to a new 10-year low on Friday, as investors continued to cool toward the fuel.

On Thursday, the natural gas market was lifted briefly by a weekly report from the Energy Information Administration that showed smaller supplies than had been anticipated, but the report was unable to generate much optimism.

With the winter heating season passing, industry experts predict that supplies will continue to build until next fall. Supply levels are currently at a record level for this time of year, and analysts worry that the record-high U.S. production levels will continue to swamp the market. Even more negative for prices are reports that gas storage facilities are almost full, resulting in even further discounting.

As of midday Friday, natural gas for May delivery was worth only $1.98 per MMBtu, down more than 30% this year.

Like OJ, natural gas prices can be sensitive to hurricane threats, as over 10% of U.S. production is located in the hurricane-prone Gulf of Mexico.

Opinions are solely the writer's. Walt Breitinger is the president of Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso, IN. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

Natural gas makes 10-year low

Natural gas prices fell to a new 10-year low on Friday, as investors continued to cool toward the fuel.

On Thursday, the natural gas market was lifted briefly by a weekly report from the Energy Information Administration that showed smaller supplies than had been anticipated, but the report was unable to generate much optimism.

With the winter heating season passing, industry experts predict supplies will continue to build until next fall. Supply levels are currently at a record level for this time of year, and analysts worry the record-high U.S. production levels will continue to swamp the market. Even more negative for prices are reports that gas storage facilities are almost full, resulting in even further discounting.

As of midday Friday, natural gas for May delivery was worth only $1.98 per MMBtu, down more than 30 percent this year.

Like OJ, natural gas prices can be sensitive to hurricane threats, as more than 10 percent of U.S. production is located in the hurricane-prone Gulf of Mexico.

Opinions are solely the writer's. Walt Breitinger is the president of Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

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