Orange juice at the highest price levels

Commodity markets saw declines last year. However, some commodities performed exceptionally well, from cocoa (+60%) to sugar (+45%) and uranium (+35%). However, none of them came close to the rally seen by orange juice (+100%), which took it into uncharted price areas above $4,00 per pound (0.45 kg), twice the previous price highs. This increase is primarily driven by supply disruptions, which may worsen as the El Niño weather event intensifies.

There is no quick solution as supplies are low and a Orange trees take 4 to 15 years to mature. However, this is a very difficult task, taking into account low commercial liquidity and great interest from investors and consumers who have alternative breakfast drinks to choose from.

Orange juice

Big price increase orange juice in 2023 was caused by shrinking supplies from dominant producers in Brazil (70% of the total), Mexico (11%) and especially the USA (6%). Everyone has been touched by a difficult mix of weather disruptions and the spread of citrus greening disease (Citrus greening disease). Global deliveries fell by 7% last year. (i.e. up to 1,5 million tons), while production in the USA decreased by one third. This is because overall demand remained flat, with secular weakness in Europe and the United States, offset by strong growth in emerging markets in China and large orange juice producers in Brazil and Mexico. At the same time, global stocks have decreased by four-fifths in recent years, giving you little flexibility to deal with any disruptions.

"The Breakfast Basket"

Rising breakfast prices will inevitably spread further down the supply chain and onto supermarket shelves. It is threat to recent drops in food prices for consumers that helped reduce inflation.

Our basket of nine popular breakfast products of equal weight has increased by 25% this year. compared with a 3 percent decline in the Bloomberg Commodity Index. Orange juice is leading the growth this year (+100%), Kakao (+60%), sugar (+45%), oats (+15%) and pork (+15%). This more than offset lower prices for wheat (-25%), milk (-10%), coffee (-4%) and tea (-2%).

About the author

Ben Laidler - global markets strategist in eToro. Capital investment manager with 25 years of experience in the financial industry, incl. at JP Morgan, UBS and Rothschild, including over 10 years as the # 1 investment strategist in the Institutional Investor Survey. Ben was the CEO of the independent research firm Tower Hudson in London and previously Global Equity Strategist, Global Head of Sector Research and Head of Americas Research at HSBC in New York. He is a graduate of LSE and Cambridge University, and a member of the Institute of Investment Management & Research (AIIMR).