NY juice rallies for 2nd day on freeze fears

Experts who studied the latest spread of cold weather in the orange state said the affected area was not wide enough to cause extensive damage to groves.

But ICE Futures' key frozen concentrated orange juice contract for March still settled up 4.95 cents, or 2.9 percent, at $1.7805 a lb.

Adding Tuesday's gain of 4.1 cents, or 2.4 percent, it was the market's biggest two-day advance since December 2010.

"I think people are just buying insurance against a possible freeze, although there is probably a bigger constituency out there that believes the cold will not last," said Bill Raffety, senior analyst at Penson Futures in New York.

Florida Citrus Mutual, the state's leading growers association, reported "cut ice in fruit and some leaf damage" in portions of the citrus belt after the subfreezing temperatures which hit on Tuesday. But it said damage was not widespread.

"Approximately three-quarters of the citrus belt has seen temperatures cold enough to result in frost, with about a quarter of the belt seeing a hard freeze," said Don Kenney, a senior agricultural meteorologist with MDA EarthSat Weather/CropCAST, a leading commodities weather risk consulting group.

Typically, citrus can sustain damage when temperatures fall for four hours or more below 28 degrees Fahrenheit (minus 2 Celsius).

Todd Barron, a meteorologist with the National Weather Service in Tampa, said there were a handful of areas where that level was reached for extended periods overnight.

James Cordier, president of Liberty Trading Group in Tampa, Florida, said a hard freeze in Florida may have been of little concern to the market in the not-too-distant past but production levels have dropped enough to make any freeze potentially significant for the state's $9 billion citrus industry.

"We really don't have the luxury of losing five, seven to 10 million boxes on a freeze," said Cordier, whose firm actively trades orange juice options.

"Last year and the year before we had cold temperatures into late January and early February, so if we did escape with minor damage or no damage last night, I think this is certainly a wake-up call," Cordier told Reuters.

Copyright Reuters, 2011