From UltimateCitrus.com:
NEW YORK (July 21, 2014) By Alexandra Wexler, Wall Street Journal – U.S. orange-juice retail sales fell to the lowest level on record as consumers continue to turn away from the beverage, once a staple of the American breakfast.
U.S. consumers bought 36.11 million gallons of orange juice in the four weeks ended July 5, down 8.3% from a similar period a year ago, according to Nielsen data published Monday by the Florida Department of Citrus. It was the lowest level of total sales since the four weeks ended Jan. 19, 2002, the oldest data available.
A greater variety of beverages, including more exotic fruit juices such as açai, energy drinks and flavored waters, have taken market share away from orange juice, analysts and traders say. Higher prices on grocery store shelves have also discouraged consumers from picking up cartons and bottles of orange juice. Retail prices for the beverage hit a fresh record, rising 3.8% from a year ago to average $6.42 a gallon in the four weeks ended July 5. The hefty price tag is partly the result of a smaller U.S. crop, which has been ravaged by a bacterial disease that chokes off nutrients to oranges and causes the fruit to drop from trees prematurely.
“Orange juice (demand) continues to suffer from all the choices and all the variety that’s available at retail,” said James Cordier, president of brokerage Liberty Trading Group in Tampa, Fla. “It’s just a changing of the times.”
Traders and analysts say waning orange-juice consumption has already been factored into prices, since the market has slid 7.6% from a two-year high touched in late April. On Monday, orange juice for delivery in September on ICE Futures U.S. closed 0.4% higher at $1.5320 a pound.
The Nielsen data showed orange-juice sales have slipped in every four week period since hitting a one-year high of 48.63 million gallons in the period ended Jan. 18, when cold and flu season prompted consumers to buy more juice for its vitamin C.
Still, orange-juice futures prices are up for the year, as supplies remain squeezed. Florida, the top U.S. citrus grower, produced 104.4 million 90-pound boxes of oranges in the season that wrapped up this month, the smallest crop in 29 years.
Supplies in storage are also tightening. During May, the amount of frozen orange juice stored in the U.S. was down 17% from the same month in 2013, according to the latest data available from the U.S. Department of Agriculture.
Another supporting factor is the Atlantic hurricane season, which began June 1. Previous hurricanes have damaged groves and ripped fruit from the trees in Florida. Orange-juice prices usually rise when a storm targets the state.
The number of bets by money managers, hedge funds and other investors as a group that prices will rise hit their lowest level since November during the week ended July 15, according to data from the U.S. Commodity Futures Trading Commission.
“I’m kind of numb to the sales figures,” said Joe Nikruto, senior market strategist at brokerage RJO Futures in Chicago. But, “you don’t have to be a market wizard to know that being short in hurricane season is dangerous.”