NEW YORK: Orange juice futures settled Friday at another 2-1/2-year low, the fourth time they ended at that level, as abundant supplies and weak demand deflated the market although short-covering trimmed losses late in the session, brokers said.
Since charging to a record high over $2 a lb in January due to fears of import curbs on juice imports from top producer Brazil, the market has lost more than half of its value after those fears proved unfounded and supplies hit the market.
"Once we found out that juice would keep flowing from Brazil, it just fell apart," said The Price Group analyst Jack Scoville.
Key July frozen concentrated orange juice fell 3.65 cents, or 3.45 percent, to end at $1.022 per lb, dealing from 97.10 cents to $1.074. That marked the lowest close for the spot juice contract since Oct. 8, 2009 and the one of the biggest weekly falls, according to Thomson Reuters data.
For the week, the market is down 16.6 percent. For a while, the 14-day relative strength index reading of the market was at 20. A reading of 30 RSI or below is considered oversold and one of 70 or higher is overbought.
Volume on Friday hit amounted to less than 2,600 lots, less than 10 percent from the 30-day norm, preliminary Thomson Reuters data showed.
With supplies more than ample, the market has also seen pressure come from the near ideal growing weather in Florida, the top citrus producer in the United States.
Despite the fall, the level of open interest in juice has risen. An indicator of investor interest, open interest rose for the fifth session running to 23,072 lots as of May 17, ICE Futures US data showed.
"It probably means people are increasing their short positions in the juice market," an analyst said.
Traders said the selling spree should begin slowing down with the approach of the annual Atlantic hurricane season when investors engage in premium buying in case a storm rips through Florida's citrus groves.
The Atlantic hurricane season begins on June 1 and ends on Nov. 30.
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