OJ futures plummet; investors await test results

AP News
Posted: Jan 11, 2012 4:25 PM
OJ futures plummet; investors await test results

Orange juice futures reversed course and fell 9.5 percent Wednesday pending more details about government testing for a fungicide that has been found in low levels in orange juice.

Orange juice futures for March delivery fell 19.65 cents to finish at $1.881 per pound, a day after the price spiked 11 percent on news of the Food and Drug Administration testing program. The price is still 14 percent higher than its recent low of $1.65 per pound on Dec. 21.

Analysts said Tuesday's jump may have been an overreaction to the news about the fungicide and that investors are questioning how much the testing program may affect supplies.

The FDA is testing shipments at borders after an unidentified company contacted the agency in late December and said it had detected low levels of the fungicide carbendazim in its orange juice and in juice sold by competitors.

The agency isn't concerned about the safety of the juice on retail shelves but if tests find orange juice with the fungicide carbendazim at levels that present a public health risk, it will take action to ensure that the product is removed from the market.

Carbendazim, which is used to control fungi or fungal spores in agriculture, is not approved for use on citrus in the United States, but is used in Brazil, which exports orange juice to the United States.

Orange juice futures have been rising sharply in volatile trading since late December, largely over concerns that cold weather in Florida could damage the crop there.

Vision Financial Markets LLC analyst Boyd Cruel said he expects the price to fall if Florida's weather remains above freezing levels and there are no developments in the FDA tests.

Other commodity prices were mixed as investors weighed signs of an improving U.S. economy against concerns that the sovereign debt crisis could lead to a recession in Europe.

Germany said its economy contracted slightly at the end of 2011. The Federal Reserve said the U.S. economy ended the year on a strong note as manufacturing expanded and consumer confidence improved.

Gold for February delivery rose $8.10 to end at $1,639.60 an ounce. In March contracts, silver rose 7.5 cents to end at $29.89 an ounce, copper increased 3.3 cents to $3.546 per pound and palladium settled up $10.45 to $645.65 an ounce. April platinum increased $33.10 to finish at $1,497.70 an ounce.

Oil prices dropped after the Energy Information Administration said gasoline demand fell by 4.8 percent last week from a year ago and demand for all petroleum products dropped by 6.5 percent.

Benchmark oil fell $1.37 to end at $100.87 per barrel on the New York Mercantile Exchange. Heating oil decreased 3.68 cents to end at $3.0646 per gallon and gasoline futures fell 0.95 cent to $2.7633 per gallon.

Natural gas plummeted as a mild U.S. winter weakened demand while North American production increased. Natural gas futures fell 16.7 cents, or 5.6 percent, to finish at $2.803 per 1,000 cubic feet.

Grains and beans were mixed ahead of a key government report due Thursday that will update its global supply and demand estimates.

March wheat rose 1.25 cents to finish at $6.41 per bushel, March corn fell 0.5 cent to $6.515 per bushel and March soybeans fell 29 cents to $12.03 per bushel.