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Column: Orange juice spikes as storm looms

Breitinger

Orange juice prices jumped this week as Tropical Storm Dorian formed in the Atlantic Ocean.

The storm is currently projected to head westward toward the Bahamas and Cuba, putting it within striking distance of Florida, home to a quarter of global orange production.

Storm damage could add to already widespread damage from a disease known as “citrus greening,” which has caused trees to prematurely drop fruit, decreasing production in Florida by more than 10 percent this year.

Some analysts warn that this rally could peter out, especially if Florida’s groves escape this hurricane season without major damage.

Global orange juice consumption has been dropping in recent years, a trend that has been accelerated by economic problems in Europe, home to more than a third of the world’s orange-juice drinkers.

As of midday Friday, frozen concentrated orange juice for delivery in September was trading at $1.44 per pound, up 20 cents (+ 16 percent) during the last month.

Soybeans smashed on China rumors

Soybean prices collapsed this week, falling nearly $2 per bushel (- 13 percent) in less than three days.

The move began early Tuesday morning, when prices had been sitting near one-year highs at $15.26 per bushel.

Some farmers in the Midwest were still holding onto the last portion of last fall’s soybean harvest, hoping that demand for U.S. soybeans would continue pushing prices higher. Instead, rumors that China was selling 3 million metric tons of soybeans triggered a quick turnaround.

Farmers and traders began rapidly selling off their soybean holdings, while potential buyers held off, waiting for lower prices. By Friday morning, prices had fallen as low as $13.30 per bushel, one of the fastest declines ever seen in the soybean market.

Going forward, market participants will continue to monitor soybean export demand and growing weather in the Midwest.

Silver rallies on stimulus news

Silver rallied more than $1 per ounce during the week (+ 5.5 percent), reaching the highest price in more than a month.

Recently, silver has been following news from the U.S. Federal Reserve, as many investors’ appetite for silver is linked to U.S. stimulus efforts. Comments by Fed Chairman Ben Bernanke this week indicated that stimulus may not taper off as quickly as some analysts expected, sparking the rally.

Despite the recent rise, silver prices are still down nearly 40 percent during the last year, making Friday’s price at $19.70 per ounce seem relatively cheap to some traders.

Walt Breitinger is a commodity futures broker 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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