Frozen concentrated orange juice (FCOJ) prices are poised to close out the month of April at the lowest level in over four years. The FCOJ market has seen a dramatic decline in prices over the past 20 months. After reaching a record high of $5.89 a pound, basis nearby futures, in September 2024, nearby FCOJ prices (OJK26) are presently trading around $1.47 a pound.
Changing consumer tastes, including a greater focus on health, have been the death knell for the FCOJ market. There has been rising consumer awareness of the negative health effects from consuming high-sugar drinks like orange juice.
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Anecdotally, this former big consumer of FCOJ found out a few years ago that drinking a huge glass of juice every morning was not the health elixir I thought it was – and pushed me close to the Type 2 diabetes category. I promptly quit FCOJ and started drinking pomegranate juice daily, and my blood sugar levels quickly dropped back to normal.
Reports suggest there have been declines in FCOJ consumption in the U.S. and Europe of 15%-25% over the past few years. Earlier this year, the Coca-Cola Company (KO) said it is discontinuing its famous Minute Maid line of frozen juice concentrates after 80 years on the market.
From the supply side, more supply from producing countries such as Spain have also worked to pressure FCOJ futures prices.
With FCOJ futures in steep price downtrends on the daily, weekly, and monthly bar charts, would-be bottom pickers looking to do some bargain-basement buying should beware. It’s apparent that the major decline in consumer demand has permanently changed the supply and demand balance sheet for FCOJ — including likely changing its price structure to significantly lower ranges. It would not be surprising to see FCOJ futures go the way of pork belly futures many years ago: being delisted due to lack of volume.
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www.barchart.com Cotton Futures Rally Despite Declining Consumer Demand
Cotton (CTN26) futures prices last week scored two-year highs as the big rally is due in part to much higher crude oil (CLM26) prices prompting a significant increase in oil-derived synthetic apparel fiber prices.
However, the cotton futures market last week suffered a technically bearish key reversal down on the daily bar chart last Wednesday. The bulls have been able to stabilize prices since then, to possibly mitigate the bearish reversal. Trading this week will be extra important. A close back above 80.00 cents in July cotton futures would put the bulls right back in business.
www.barchart.com Risk appetite in the general marketplace will continue to impact the cotton market, as will crude oil prices.
Improving U.S.-China trade relations in recent months could be a bullish element on the U.S. cotton export demand front. Presidents Donald Trump and Xi Jinping are scheduled to meet in China in mid-May. Xi is expected to visit the U.S. later this year.
While rising crude oil prices have pushed cotton back into the spotlight due to its recent gains over polyester for spindle share, the cotton market’s recent big price rally is now a “tired trade” for anyone still holding bullish long-side aspirations. Also, like FCOJ, consumer apparel preferences in recent years have moved away from cotton and more toward better-performing synthetics — especially in active and athletic clothing.
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On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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