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Orange juice prices have skyrocketed to all-time highs as severe drought and widespread crop disease have crushed yields in Brazil, the world’s top exporter, leaving soft-drink companies facing a “dire” situation.
Concentrated orange juice futures traded on Intercontinental Exchange in New York hit $4.92 a pound on Friday, almost three times higher than prices two years ago, as global supplies of the fruit for juicing plummet.
For soft-drink companies, which use the futures market to try to hedge against big price moves and are having to stomach the higher costs, the situation is “extremely dire”, said Harry Campbell, analyst at Expana. “They’re just like ‘we don’t even know what to do.’”
In May, citrus growers and juice firms association Fundecitrus based in the orange-growing state of São Paulo forecast that Brazil would produce its smallest crop in 35 years, saying yields would be down almost 25 per cent from last year.
But now “even that quite pessimistic forecast probably won’t be achieved, given the conditions we’re seeing”, said Andrés Padilla, an analyst at Rabobank.
“We’re going through the worst drought in 50 years in Brazil, so there’s really been very, very little rain across the citrus belt in the last four months, which is an important period,” he said.
He added that meteorologists were also predicting that the upcoming rainy season, which usually starts at the end of September, would come late this year.
“The smallest crop in 35 years, plus rising citrus greening disease, plus drought — it’s the perfect storm,” said Padilla. “The market is really stressed.”
Twenty years ago citrus greening — a disease spread by sap-sucking psyllid insects that makes the tree’s fruit bitter before killing it altogether — began to spread across Florida, decimating orange groves in the US’s main growing region.
Now it is sweeping across Brazil. In 2023, 38 per cent of Brazil’s orange trees showed symptoms of the disease and the psyllid population was the highest recorded since the first reports of the disease in 2004, according to Renato Bassanezi, researcher at Fundecitrus.
Some factors, such as beefed-up disease control including more effective use of insecticides, led Fundecitrus to believe that “the rate of increase in the incidence of greening will slow down”, he said.
But in many of Brazil’s orange orchards, the damage is already done. Affected trees have lower yields, with productivity decreasing over time as the disease progresses. The fruits also fall prematurely and produce lower-quality juice, said Bassanezi.
Brayan Palhares, a citrus grower from São Paulo state, said that 2024 was the worst in terms of productivity since his father started growing oranges in 1970. In parts of his land that have produced an average of 1,800 boxes per hectare over the last 10 years, this season delivered only 470 boxes, he said, “making this year extremely difficult”.
While other countries, such as Italy and Spain, produce oranges, these tend to be for the fresh fruit market. Brazil is almost alone in serving mostly the juice market.
“There’s no juice in the market,” said Padilla. “That’s why we’re back to record high prices.”
“For consumers it means that an already expensive orange juice will get more expensive,” said Kees Cools, president of the International Fruit and Vegetable Juice Association (IFU), adding that there were “many more affordable healthy and tasty alternatives.”
However, apple juice prices are also soaring.
Spring frosts have hampered yields in Poland, Europe’s biggest producer of apples for juicing and a major exporter to the US, according to Expana’s Campbell. Prices are going “through the roof”, he said.
The food and beverage industry needs crop science to come up with new hybrid plants and trees resistant to extreme weather and diseases, said Cools.
The IFU and others are calling for legislative changes that would allow orange juice makers to use other more climate-resilient fruits, such as mandarins, without changing the name of their products.
In the meantime, however, farmers such as Palhares are hoping the situation soon improves.
“We are hoping that next year we won’t face these same issues and will return our production to the same level as before,” he said.
Additional reporting by Tamires Vitorio in São Paulo