NEW YORK: Orange juice futures closed 2 percent higher on Friday after the US Food and Drug Administration found juice from Brazil and Canada tainted with a fungicide that is prohibited in the United States.
Such a finding in Brazil juice has traders worried that FDA may ban imports from there. Brazil is the world's biggest producer of citrus and supplies half of US orange juice imports.
The key March frozen concentrated orange juice contract climbed 4.30 cents, up by 2.08 percent, to finish at $2.109 per lb, in a wide band running from $2.06 to $2.155.
For the week, the market is up more than 5 percent in value.
Volume traded on Friday was modest at best at more than 1,800 lots, more than 50 percent below the 30-day norm, Thomson Reuters preliminary data showed.
"People had to figure it out," said The Price Group analyst Jack Scoville. "We are looking at lower supplies available (for the US market)."
The FDA said 11 samples of imported orange juice had tested positive for the fungicide carbendazim. Five of the samples were from Brazil and six from Canada.
Brazil's orange juice industry said Friday it is urging US authorities to permit a higher level of the fungicide in its shipments.
Juice dealers were also wondering if the FDA news accounted for all of Friday's surge, since the market had initially been near unchanged when the regulators released their findings.
"The market had also corrected this week and we're just regaining the ground lost in that correction," a dealer said.
Traders said the FDA verdict also left unsaid what will happen next to juice imports from Brazil, the world's top citrus producer and accounts for 10 percent of all US supplies.
"The question is what they are going to do going forward," said Country Hedging Inc analyst Sterling Smith. "They've left us hanging."
Fears of a potential ban by US health regulators of Brazilian juice products using the fungicide had powered a recent rally that sent orange juice futures to record territory this week.
Brazilian juice is used by leading US producers such as Pepsico's Tropicana and Coca Cola's Minute Maid in a blend with oranges from Florida.
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