Jan. 10 (Bloomberg) -- Orange-juice futures jumped, capping the biggest weekly gain in nine months, after the U.S. government cut its forecast to the lowest since 1990 for the crop in Florida, the world’s second-largest citrus grower.
In the season started Oct. 1, farmers may collect 115 million boxes of oranges, down 5 percent from a December projection of 121 million, the U.S. Department of Agriculture said today in a report. Analysts surveyed by Bloomberg News expected 119.43 million, on average.
Future rose by the exchange limit to a seven-month high amid mounting concerns that a crop disease will shrink the harvest. A gnat-sized insect, the Asian citrus psyllid, spreads citrus greening, causing fruit to wither and drop early. The USDA last month formed an “emergency response framework” to combat the bugs.
“Once again, citrus greening rears its ugly head,” said Michael W. Sparks, the chief executive officer of Florida Citrus Mutual, an industry group, said in a statement “We are in an unprecedented situation dealing with this disease and today’s crop estimate only emphasizes how important it is for research to uncover a solution.”
Orange juice for March delivery climbed 4 percent to settle at $1.481 a pound at 2 p.m. on ICE Futures U.S. in New York, the biggest gain for a most-active contract since Nov. 8. This week, the price climbed 6 percent, the most since April 5.
Earlier, futures jumped by to the maximum of 10 cents to $1.524, the highest since June 12. Trading almost doubled compared with the average volume in the past 100 days, according to data compiled by Bloomberg. A box weighs 90 pounds, or 41 kilograms. Brazil is the top grower.
In the past 12 months, orange juice has surged 32 percent, the most among 19 raw materials in the Thomson Reuters/Jefferies CRB Index. The rally may boost costs for Pepsi Co., maker of Tropicana juices, and Coca Cola Co., which sells Minute Maid and Simply Orange brands.
The USDA data “is a further reflection of what we’ve seen in the groves, which are being stressed from greening,” said John Ortelle, a vice president at McKeany-Flavell Co., a broker in Oakland, California, who had the most accurate forecast in the Bloomberg survey of seven analysts. “This is an ongoing problem and a bad situation for Florida’s growers.”
In the next six to 10 days, weather will be colder than normal across major growing regions in Florida with the lowest temperatures in the mid-30s degree Fahrenheit, Kyle Tapley, a meteorologist at MDA Weather Services in Gaithersburg, Florida, said in a telephone interview. There is no frost risk, he said.
--Editors: Patrick McKiernan, Joe Richter