The cost of orange juice is set to rise in the UK due to worldwide shortages of the fruit, experts have warned.
Orange juice futures have this week surged to record highs after multiple hurricanes and disease-decimated crops in the US and Brazil, two of the world’s largest orange suppliers.
The incidents, which have led to some of the lowest production levels in a century, have pushed up the financial benchmark for the futures contract to $3 a pound.
It might take anywhere ranging from a few months to a year for shoppers to notice increases at shelves, one sector source pointed out, but retailers can expect to receive cost price increases imminently.
“Realistically, in some cases, because of the timing of the contract, you could expect [increases] fairly soon, like in the next few months,” the source said.
“But in the case of some contracts, which were maybe negotiated more recently, it wouldn’t come for another spell – like another year.”
Rabobank commodity analysts have described the market picture as “dire”. Both Brazil – the world’s largest orange supplier – and the US state of Florida, which accounts for more than 90% of the country’s supply, have grappled with a devastating disease as well as extreme weather events.
The stock price of orange juice concentrate is up 83% year on year at $3,770/mt, based on Mintec data for the month of July. It has also jumped 15% since June.
The situation has been deteriorating for a few years now: in Brazil, the average volume of the last four harvesting seasons (2020-2023) is down 12% on the previous four seasons’ average.
In Florida, the last three seasons’ average volumes shrunk 40% compared to the same harvesting period between 2017 and 2019.
The British Fruit Juice Association warned any future price increases could remain “for a while” as it would take the sector some time to recover.
“There is currently a scarcity of orange juice across the world – we are, at this moment, in a very difficult situation, as orange juice is at the lowest availability for more than 50 years,” said BFJA chair David Fox.
“This severe shortage is due to crop failures in Florida and historically low juice inventories in Brazil. With extreme weather becoming more frequent and tree diseases diminishing harvest yields, price increases are expected.
“Suppliers and manufacturers are working hard to manage the situation to limit these shortages but realistically this situation could be with us for a while.”
Because of Florida’s focus on US domestic markets, its exports to Canada and Europe have slumped, the head of trade body Florida Citrus Mutual told the FT.
EU orange juice production can only meet approximately 15% of the domestic demand, according to Mintec, relying on imports to fulfil the remaining 85%.
Brazil is the leading supplier, accounting for 90% of EU orange juice imports, but other suppliers of orange juice to the EU include Mexico, South Africa, Argentina and Egypt.
However, unlike some of its southern European counterparts, which are also big citrus producers, Britain is much more vulnerable to supply changes because it relies heavily on imports of fresh produce.
Rising prices for orange juice, which according to the BFJA is the best-selling fruit juice, could add pressure to already cash-strapped shoppers battling high levels of food inflation.
The extent of those price hikes will “depend on the size of the retailer, the volumes they’re purchasing and their bargaining strength”, the sector source said. They said it was “likely that Tesco will negotiate a better price than some of the smaller ones like an Ocado”.