NEW YORK: US orange juice futures closed up on Wednesday, after a dive in prices over the past seven sessions prompted players to buy into a market they believed was on the verge of bottoming out, traders said.
"This looks like short-covering activity although what we recovered today hardly compares to what's been lost over the past week," said Sterling Smith, analyst at Country Hedging Inc. in St Paul, Minnesota, who follows juice futures among other commodities.
The key July contract for frozen concentrated orange juice on ICE Futures US rose 0.8 cents, or 0.7 percent, to end at $1.1750 a lb. The session high was $1.2290 versus the low of $1.1485.
July FCOJ had lost a cumulative 21 percent over seven previous sessions, falling to the lowest levels since November 2009 for the benchmark second position contract. Even after Wednesday's rebound, the contract remained down more than 31 percent for the year.
It's a far cry for a market that surged to record highs in January over fears of a supply crunch from the use of a prohibited fungicide in top citrus producer Brazil.
Traders have forecast orange juice supplies to remain abundant going forward although Brazil's crop in 2012/13 is expected to be down 15 percent from the bumper harvest of 428 million (40.8 kg) boxes in 2011/12.
But some analysts, like Smith, think speculators may cover more short positions before the start of the annual hurricane season, which runs between June 1 and Nov. 30.
"We're looking at a 12 to 17 percent price premium from current levels before the start of hurricane" season, Smith said.
FCOJ volume on Wednesday was just above 1,360 lots, or about 40 percent below the 30-day norm, preliminary Thomson Reuters data showed.
Open interest, an indicator of investor exposure, rose for the fifth day in a row to 22,061 lots as of May 8, the highest level since March 21, 2012, ICE Futures US data showed.
Comments
Comments are closed.