FCOJ futures have had a relatively wild ride in the last few weeks. Prices went above 102.00 May for the first time since the beginning of the year in February and acted ready to move higher and perhaps significantly higher. Then, prices stalled and futures moved back down into the trading range between 98.00 and 102.00 for a few weeks before dropping below support and testing down to 92.15 May. Then the Coronavirus hit and futures went back up to the range. Now prices are fading lower again.
It has been quite a ride and it is somewhat disappointing that the onslaught of the Coronavirus has not really produced more demand for FCOJ in the American market. After all, Americans should want to try to prevent getting the virus and one way to do that is by drinking a glass of Orange Juice each morning. But the demand bump has been minimal and this highlights the problems with the market right now.
There are plenty of Oranges in Florida right now for making FCOJ. The crop is still being harvested but all reports indicate that a bumper crop has arrived. There are reports of some production problems this year in Mexico from earlier dryness, but Brazil’s crops are looking good and will offer plenty of competition for sales abroad and here at home.
On the demand side, the Coronavirus makes transportation that much more difficult. The workers on the ships could carry the disease and people with the disease or even virus free are not going out too much. So, the demand might crop due to the virus instead of increase.
FCJ futures can hold in the 90’s for the foreseeable future either way. Prices might be cheap enough although historically prices have been even lower that the current levels. But there is no real reason for any kind of a major up move in futures to develop anytime soon. The best the market can hope for is a choppy and sideways trade rather than a V bottom and a big move from here. We will need to absorb the harvest before any kind of a major rally can even be contemplated. The amount of FCOJ made from the current crop plus imports will go a long way to deciding the longer term upside price potential. For now one would think that the price rally potential is rather slim. Jack Scoville