Demand and supply dynamics favor bulls

Orange juice price remained at an elevated level as demand for the commodity continues to outpace supplies. It was trading at $2.37 on Wednesday, a few points below the year-to-date high of $2.449. It has been one of the top-performing commodities, having jumped by 172% from its lowest point in 2019.

Demand outpaces supply

Orange juice is an important commodity that is widely used around the world. In the United States, it is estimated that revenue in the orange juice segment came in at $10.24 billion. And studies expect that it will have a CAGR rate of almost 2% in the next few years. The biggest producers of orange are Brazil, China, and countries in the European Union. 

Like most crops, orange is seeing a significant impact from climate-related risks. Rainfall in its key countries has been relatively below historical standards. At the same time, the growing population means that demand is expected to keep rising in the coming months.

The most important news in the industry is Hurricane Ian, which happened in 2022. This hurricane came just a few years after the devastation caused by Hurricane Irma. It hit Florida, one of the biggest places where orange trees are planted in the United States.

In a recent report, the government said that orange crop will drop by 56% this season. Alico, one of the biggest companies in the industry, made a big loss in the last quarter. The company believes that it will take at least two more years to go back to normal. This recovery will likely be disrupted by another hurricane.

Other countries are seeing major challenges as well. In Brazil, a key producing state suffered from heavy rains that delayed harvesting and damaged yields. Therefore, from a fundamental perspective, orange juice price could continue soaring.

Orange juice price forecast

Orange juice chart by TradingView

The daily chart shows that orange juice prices have been in a spectacular rally in the past few months. It is being supported by the 50-day and 25-day exponental moving averages. However, it has formed what looks like a double-top pattern, which is usually a bearish sign. 

The MACD has also formed a bearish divergence pattern while the Relative Strength Index (RSI) is stuck at the neutral point at 50. Therefore, we can’t rule out a situation where orange juice continues soaring as buyers target the year-to-date high of $2.56.