In this commodity guide, we discover why oranges continue to be a valuable commodity after thousands of years of farming.
We explain the ideal conditions and climate for oranges to grow, and which countries produce the most oranges as a result.
Read on to learn about the main price drivers of orange juice on the global market.
Interested in how orange juice is traded? See our full guide, or if you want to get started trading right now, here are options available in to consider:
Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.
What Makes Orange Juice Valuable?
Orange juice is a beverage made from squeezing the fleshy fruit of the orange tree. In many countries, particularly in the western hemisphere, it is a staple item on breakfast tables.
Historians don’t know the precise origins of oranges, but Chinese manuscripts from 2200 BC reference the fruit. In the 15th century, Spanish explorers introduced oranges in the New World, and by the 19th century, orange trees grew wild in Florida.
People throughout history have produced juice from oranges, but it wasn’t until more recent history that large-scale orange juice production became practical.
How Did Orange Juice Become A Mainstream Consumer Product?
In the 1940s, Cedric Donald Atkins invented a process for producing concentrated juice that could be frozen.
Combined with the expansion of modern home refrigeration, frozen concentrated orange juice (FCOJ) brought orange juice to millions of consumers.
Today, FCOJ is a popular global commodity traded on futures exchanges and part of the multi-billion dollar orange juice industry.
How Are Oranges Grown?
Orange trees are grown in tropical and subtropical climates with warm or hot summers and mild winters. Although they grow in many different varieties, the two basic categories are the sweet orange and the bitter orange.
Sweet oranges are used to produce orange juice and can be divided into four classes:
|Common Orange||Popular varieties among the dozens of common oranges include the Valencia, Hart’s Tardiff Valencia and the Hamlin. The Valencia is the most popular juicing orange.|
|Blood or Pigment Orange||Two varieties - the light blood orange and deep blood orange. These fruits have a deep red hue.|
|Navel Orange||A common grocery orange that comes in several varieties including Cara cara, Bahia and dream navel.|
|Acid-Less Orange||Low acid fruits that are not cultivated in great quantities.|
Prerequisites To Growing Oranges
Orange trees are very climate-sensitive plants and need specific temperatures and precipitation levels to thrive.
FCOJ traders must carefully monitor climate conditions in key growing regions; slight changes in temperatures or rainfall can create enormous price volatility for the commodity.
When they are actively growing outside of the winter months, orange trees do best in temperatures of between 55 and 100 degrees Fahrenheit.
In the winter they are dormant and require temperatures higher than 35 degrees Fahrenheit.
How Do Orange Trees Respond To Frost & Rainfall?
Trees are frost-sensitive and enter a danger zone if temperatures stay below 25 degrees for extended periods.
Orange trees do best in areas that receive between 40 to 45 inches of annual rainfall. They can tolerate drought conditions, but they tend to produce less fruit under extended dry conditions.
All citrus, including orange, must ripen on trees. The harvesting season for each variety of orange is different.
How Are Oranges Harvested?
Valencia oranges, which are the main juice crop, are harvested between March and July. In Florida, the main orange-producing state, oranges bloom between March and April.
Growers in Florida harvest 96% of the crop by hand using wooden ladders and canvas pick sacks. Mechanical harvesters pick the remainder of the crop.
Pickers and mechanical harvesters dump the fruit into plastic tubs that hold about 900 pounds each of oranges. Special trucks called goats then load the tubs onto tractor-trailers that hold 45,000 pounds of fruit.
Truck tractors then drive the tractor trailers to fruit processing plants.
How Is Orange Juice Produced?
FCOJ juice competes with two other juices not squeezed directly at the time of consumption: reconstituted liquid juice and not-from-concentrate (NFC) juice.
In the mid-1980s, NFC juice surpassed FCOJ in sales.
However, FCOJ is the easier product to store (it doesn’t perish) and ship (it’s condensed). FCOJ remains the benchmark commodity for measuring the price of orange juice.
Orange Juice Processing In Florida: Step-By-Step
Producers in Florida take the following steps when making FCOJ:
- Sample the fruit to ensure quality
- Clean and wash the fruit
- Recover orange oil from the peel of the fruit
- Extract juice from the fruit. Approximately 50% of the weight of an orange is juice
- Screen the juice to remove seeds and large pieces of pulp
- Heat the juice to inactivate natural enzymes that inhibit the quality of the product
- Concentrate the juice in a high vacuum evaporator to remove the water and concentrate the juice sugars and solids
- Freeze and store the concentrate
- Blend the concentrate with fresh juice to enhance the flavor of the final product
Over 90% of oranges grown in Florida go into juice production in all forms.
Unlike most other agricultural commodities, orange juice is purely a dietary staple and doesn’t have other industrial or consumer uses.
Did you know that Florida accounts for more than a 6% share of all US fruit and vegetable production?
Florida’s female farmers are also picking up in number with over 40% lady farmers at work.
Top Orange Juice Producing Countries
The following countries produce the most orange juice in the world:
|Rank||Flag||Country||Orange Juice Produced Per Year (1,000 Metric Tons)|
|#2||United States of America||312|
*Since European countries are far off the list, we included the EU’s total orange juice production.
What Drives Orange Juice Prices?
Orange juice prices react most to these five factors:
- Consumer Demand
- USDA Production Estimates
- Food Safety Concerns
Weather Impact On Orange Farming
Weather plays an enormous role in moving orange juice prices.
Florida is the epicenter of orange juice production in the United States, and the state experiences very volatile weather conditions.
In recent years, damage from hurricanes in the fall and excessive frost in the winter has decimated many orange groves.
Orange juice traders pay very close attention to weather forecasts. Sometimes anticipation of bad weather, such as an approaching hurricane, can cause big spikes in orange juice prices.
If the damage from bad weather turns out to be less than expected, prices can retrace back to where they started.
Consumer Demand: Are People Still Buying?
Consumer demand for orange juice is surprisingly more volatile than other agricultural commodities. In recent years demand has been declining precipitously, particularly in the United States.
There are many potential explanations for this decline. The diminishing cultural importance of breakfast and the high sugar content of orange juice are two possible reasons.
However, most of the consumption declines have occurred in the United States and Germany, while emerging countries such as China, Brazil, and Russia are seeing increases.
Orange juice traders should pay attention to these consumption patterns as they can offer important clues about future prices.
USDA Production Estimates
The United States Department of Agriculture (USDA) publishes estimates each October that forecast orange production for the coming year.
Satellite imagery of orange groves and modern advances in estimating agricultural yields should make this number fairly predictable, but it’s not predictable at all.
In recent years, forecasting errors have led to supply surprises, and these surprises can move markets.
Supply surprises from Brazil, the world’s largest producer of orange juice, can also create price volatility.
In fact, despite declining global demand for orange juice, prices have stayed firm due to supply shortages from both the United States and Brazil.
Food Safety Concerns: Chemical-Induced Farming
Food safety concerns can cause supply shocks and higher orange juice prices. Growers often use chemicals and pesticides to protect their crops from insect damages.
In the past, the use of these products has led to bans on orange imports and higher orange juice prices.
Orange Tree Diseases
Crops in both Brazil and the United States have faced threats in the recent past from diseases that kill orange trees.
Whether or not scientists are successful in eradicating these diseases could have a big impact on orange juice prices.
Where Can You Trade Orange Juice?
If you want to do more research on what orange juice based instruments brokers offer, see these regulated brokers available in :
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
If you’re ready to learn about trading orange juice, see this Orange Juice Trading Guide.
Otherwise, check out these commodity guides on other agricultural assets where we explain:
- How coffee beans are processed
- What makes cocoa valuable as a commodity
- Why live cattle and lean hogs are still significant market contributors today
- How oats are processed and sold