Orange Juice Prices Could Be Headed Even Higher

In case you haven't noticed, the price of orange juice has surged this month because of growing speculation the U.S. might ban orange juice from Brazil. It turns out Brazilian growers have been using a fungicide not approved under U.S. regulations.

Since the issue first arose earlier this month, futures traders have bid up the price of orange juice by 27 percent. Prices on the futures market rose again Monday as more traders began to place bets on an import ban.

Consumers have yet to see much in the way of higher prices, but should a ban go into effect, it seems higher retail prices will be a certainty. Right now it's a Wall Street story, but the longer it goes on, the more it affects Main Street.

Awaiting test results

The U.S. Food and Drug Administration (FDA) is testing Brazilian juice for the fungicide, known as carbendazim, but as of yet has had little or nothing to say publicly. The agency did say last week that it is awaiting the results of the tests in conducted on the samples. The small amounts that it has detected so far, it says, is not enough to block the sale of the product.

While most orange juice is produced in the U.S., Brazil now accounts for as much as 10 percent of U.S. supplies. The loss of Brazilian imports would be a sudden and significant reduction in supply and push retail prices higher.

However, if the FDA fails to find traces of the fungicide and imports are not affected, analysts say futures prices for orange juice are likely to come down just as fast as they went up. Any retail price increase is likely to be temporary.

Carbendazim is used to control a broad range of diseases on arable crops, fruits and vegetables. Research on mice showed increase tumors in two out of three studies. Carbendazim is classified by the World Health Organization (WHO) as ‘unlikely to present hazard in normal use.’