This drove up orange juice prices during the pandemic, and they will likely continue to rise: Frozen orange juice futures jumped more than 50% during the pandemic, and they’ve peaked in two years last week – climbing 5% just on Thursday.
“You have your classic supply and demand mismatch,” said Shawn Hackett, president of Hackett Financial Advisors, which specializes in agricultural commodity analysis. For this reason, consumers should expect “much higher prices at the supermarket”.
Over the past year, food eaten at home was 6.5% more expensive, while restaurant prices increased by 6%. Fruit juice and soft drink prices have already climbed 5.7% this year, and orange juice futures are up.
The supply is decreasing
Last week, the USDA said it expects Florida to produce 44.5 million boxes of oranges this year, an unusually low harvest. That would be the smallest since the 1944-45 season, when 42.23 million cans were produced, a Florida USDA statistician told CNN Business.
“Florida’s citrus harvest will be one of the smallest since the 1940s,” said Judith Ganes, president of J Ganes Consulting, which provides commodity testing to the agribusiness industry. “It will be even smaller than the production that happened several years ago … when Hurricane Irma swept through Florida,” she said.
Florida’s orange crops, which are responsible for most of the nation’s orange juice, have been declining for years, she noted. One of the culprits is an insidious citrus disease called citrus greening, which leads to smaller oranges and fewer fruits per tree.
“The disappointment of a further decline in the forecast is hard to overstate,” Shelley Rossetter, assistant director of global marketing at the Florida Department of Citrus, said in a statement. She added that Florida citrus growers are focused on “finding new solutions to citrus greening.”
Smaller oranges produce less juice, Ganes explained. This means that processors, who already have to pay more due to the dwindling supply of oranges, also have to buy more oranges to produce the same amount of juice from healthy fruit. This, in turn, means higher costs for consumers.
At the same time, international producers face their own shortages.
“Brazil experienced a historic drought last year that significantly affected the orange crop used to produce orange juice,” Hackett said. “They won’t have exportable supplies to the [typical] level.”
Demand is growing
Before the pandemic, “U.S. demand for orange juice had been declining for 20 years in a row,” Hackett said.
That’s partly because consumers’ changing ideas about health have made fruit juices, which are relatively high in sugar and calories, obsolete. It’s also because over the years, many Americans have stopped eating breakfast at home on a regular basis, opting instead for a meal on the go.
But during the pandemic, many have started eating breakfast at home again, and some have put orange juice back on the menu.
Because of this, U.S. sales of 100% single-strength juice grew from $5 billion to $5.5 billion in 2020, and remained mostly at that level in 2021, according to data from Euromonitor International.
“We’re still facing much higher demand today than it was in 2019, before the pandemic hit,” Hackett said. “So we have this renewed demand at a time when available supplies are very low.”