Oranges and Orange Juice

The orange tree is a semi-tropical, non-deciduous tree, and the fruit is technically a hesperidium, a kind of berry. The orange originated in India and was called na rangi in Sanskrit. The original fruit was bitter compared to modern varieties. The three major varieties of oranges include the sweet orange, the sour orange, and the mandarin orange (or tangerine). In the US, only sweet oranges are grown commercially. Those include Hamlin, Jaffa, navel, Pineapple, blood orange, and Valencia. Sour oranges are mainly used in marmalade and as an ingredient in liqueurs such as triple sec and curacao.

Frozen Concentrated Orange Juice (FCOJ) was developed in 1945, which led to oranges becoming the main fruit crop in the US. The world’s largest producer of orange juice is Brazil, followed by Florida. Two to four medium-sized oranges will produce about 1 cup of juice, and modern mechanical extractors can remove the juice from 400 to 700 oranges per minute. Before juice extraction, orange oil is recovered from the peel. Orange oil is used to produce flavors, perfumes, wood furniture conditioners, and cleaning agents. Approximately 50% of the orange weight is juice, the remainder is peel, pulp, and seeds, which are dried to produce nutritious cattle feed.

Frozen concentrated orange juice future and options are traded on the NYCE division of the New York Board of Trade (NYBOT). The NYCE orange juice futures contract calls for the delivery of 15,000 pounds of orange solids and is priced in terms of cents per pound.

Prices – NYCE orange juice futures in 2003 were locked in a sustained bear market that lasted all year and produced new 3-decade lows. Orange juice prices fell to levels not seen since the 1970’s, producing some serious financial problems for orange producers. Orange juice futures closed 2003 on the year’s low at 60.75 cents per pound, down 34% from the 2002 close of 92.20 cents. Bearish factors centered on weak demand with the emphasis on low-carbohydrate diets and a bumper crop in Florida in 2003.

Supply – World production of oranges in the 2001/2 marketing year rose +7.1% to 48.301 million metric tons from 45.108 million in 2000-1. The world’s largest producers of oranges are Brazil with 37% of world production, followed by the US (24%), and Mexico (8%).

US production of oranges in 2002/3 fell –5.9% 267.0 million boxes. Florida production fell -11.7% to 203.0 million boxes, while California production rose by 20.4% to 62.0 million boxes. California oranges go mostly to the fresh market while about 90% of Florida's oranges are processed for frozen orange juice concentrate. Florida produces approximately 70% of US oranges. The orange juice yield in 2002/3 was 1.54 gallons per box, which was a 7-year low.