Economist Tom Spreen discussed the impact of imports in the United States orange juice (OJ) market at the Sept. 16 Florida Citrus Commission meeting. Spreen is retired from the University of Florida Institute of Food and Agricultural Sciences.
Spreen’s analysis began with increased imports in 2017 after Hurricane Irma struck Florida. Largely as a result of the storm, nearly 24 million fewer boxes of Florida oranges were produced that season than in the previous season. Florida-based juice processing companies increased their imports of not-from-concentrate (NFC) and frozen concentrated orange juice (FCOJ). The main suppliers of imported OJ are Brazil, Mexico and Costa Rica.
In 2018-19, the Florida orange crop rebounded unexpectedly. Imports, however, failed to decline in response. Brazil is the main supplier of NFC imports, with a small portion coming from Mexico. Mexico is the main supplier of FCOJ imports with smaller amounts coming from Brazil and other foreign markets.
Increased imports in 2018-19 caused Florida processors to end the season with 52 weeks of supply-movement of FCOJ and 39 weeks of NFC. By October 2019, FCOJ inventories had increased to 60 weeks of movement while NFC inventories stood at 32.5 weeks. Spot prices for fruit crashed, and delivered-in prices for early-mid oranges and Valencia oranges were approximately one-half the prices received on the spot market in 2018-19, and well below the cost of production for nearly all Florida growers. Additionally, a higher share of Florida processed oranges were utilized as FCOJ during the earlier part of the season compared to previous years.
In 2019-20, orange production declined slightly to 67.65 million boxes. Imports declined significantly due to high beginning inventory. The COVID-19 virus arrived in 2020, and U.S. orange juice consumption rose at retail, especially NFC consumption. These factors combined to reduce NFC inventories, which were 25 weeks of movement by the end of August 2020.
FCOJ inventories have not shown the same decline and remain at over 47 weeks of movement. Spreen said with the Florida processing season still two to three months away and continued reduced NFC imports, NFC inventories could fall below 20 weeks of movement by the time Florida processing begins.
Florida Citrus Mutual CEO Mike Sparks recently testified about Mexican juice imports to federal officials; learn more here.
Source: Florida Department of Citrus
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