NEW YORK: Orange juice futures ended higher on Friday, posting their first weekly rise in three weeks, boosted by supply concerns a day after the US health regulator declined a request to allow higher tolerance levels of a banned fungicide in juice imports.
The US Food and Drug Administration said on Thursday it had turned down a request by orange juice producers to change the levels it accepts of carbendazim, a fungicide commonly used in the Brazilian orange juice industry.
The FDA's decision will likely force Brazil, the world's top OJ producer, to stop exporting concentrated orange juice to the United States, renewing fears of a supply crunch that sent citrus prices to a record four weeks ago, analysts said.
Benchmark March frozen concentrated orange juice gained 2.75 cents or 1.5 percent to close at $1.878 per lb, trading from $1.8685 to $1.95, a 1-1/2-week high.
March futures posted a gain of 0.7 percent for the week after dropping sharply in each of the previous two weeks.
On Friday, the March contract ended sharply off its session highs as an initial rally appeared to run out of steam.
Traders said that with retail demand stagnant, there seemed little anxiety in the market over the Brazilian imports.
The market has lost around a fifth of its value since the March contract hit an all-time high of $2.2695 on Jan. 23 due to speculation of a US ban on Brazilian juice imports.
Brazil asked the FDA to give it until June 2013 to eradicate carbendazim from its juice after the regulator began checking all imports in January for the chemical, which it banned in 2009.
Brazil will still be able to ship its US customers orange juice that is not from concentrate, since that variety contains much smaller levels of carbendazim.
Investors have been reducing their exposure in the juice market. Open interest, an indicator of investor presence, has dropped around 10 percent to 23,769 lots as of Thursday versus its peak in mid-January, ICE Futures US data showed.
Volume on Friday totaled a busy 6,900 lots late in New York business, set to be the highest level since it soared to a record in January, Thomson Reuters preliminary data showed.
On Thursday, the exchange said, 3,885 lots changed hands.
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