Jun 9, 2024 - Energy & Environment

Orange juice falls prey to inflation

The line chart shows monthly average retail price for frozen concentrate of orange juice per 16 ounces from January 2020 to April 2024. In April 2024, the prices reached an all-time high, costing $4.28 per 16 ounces, a 42% jump from $3.01 a year ago for the same month.
Data: USDA; Chart: Deena Zaidi/Axios Visuals

Fruit-borne disease and extreme weather, amplified by a warming climate, are throttling orange-producing regions in Brazil and Florida — curbing harvests and driving up citrus prices.

Why it matters: Oranges, one of the fruits of choice in the U.S., are currently facing a supply crisis. It's adding to the list of everyday items impacted by inflation, which continues to frustrate consumers and color their perceptions of the economy.

Zoom in: In 2023, Brazil exported over 31% of its total orange juice production to the US — making America the second-largest export destination after Europe, which received nearly 55%, according to data from CitrusBR.

  • Brazil produces roughly 70% of the global supply of orange juice. However, main orange-producing areas in Sao Paulo and Minas Gerais are estimated to drop roughly 24% from the previous year.
  • If the production forecasts hold true, then this would make oranges the second smallest crop since 1988, , according to figures from Fundecitrus, a Brazilian association of citrus growers and juice manufacturers.

Catch up quick: Typically, manufacturers blend frozen orange juice from different seasons to balance flavors, but low supply have emptied stockpiles, making it difficult to maintain consistency, The Financial Times reports.

  • Rising cost of orange juice frozen concentrate in the U.S. could also be a factor; average retail prices have spiked 42% to an all-time high in April, from $3.01 per 16 ounces a year ago to $4.28.
  • The global price of oranges is $3.68 per pound for April this year, up from $2.76 per pound a year ago, according to the data from International Monetary Fund (IMF).

By the numbers: Florida, the nation's top citrus producer, has also seen its bearing acreage dwindle at an average rate of 3% per year since 2003.

  • The U.S. Department of Agriculture (USDA) forecasts that despite the 2024 orange production in Florida forecasted at 19% higher than last year, it still remains the lowest harvest in 90 years.
  • Overall, the orange production in the U.S. dropped 5% from April, according to the May forecast by USDA.
  • Industry players have hedged against price swings of concentrated orange juice futures on Intercontinental Exchange in New York, which hit $4.95 a pound in on May 28 this year.

Zoom out: Oranges are falling prey to similar forces battering a wide range of commodities, which have sent global prices on a broad-based tear.

  • Sugar prices are rising due to the global weather risks in major sugar producing nations of Brazil, India and Vietnam.
  • Cocoa price briefly touched $10,000 in March due to number of factors including changing weather patterns in world's top cocoa producers, Côte d'Ivoire and Ghana.
  • Coffee harvests suffered after extreme drought hit coffee bean harvests in Southeast Asia, especially Vietnam and Indonesia.

What they're saying: "Food prices are a very tangible way to talk about climate change," Uriyoán Colón-Ramos, an associate professor of nutrition and global health at George Washington University, tells Axios.

  • "People keep wondering why the prices haven't gone down and there are a million explanations out there, but buried in there are the changing weather patterns and floods that affect crop production," she says.

What's next: Falling production is prompting juice manufacturers to explore citrus alternatives. This shift could lead to increasing quantities of other juices like pear, apple and grape.

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