Orange Juice Rises as Storm Fay Threatens Florida Citrus Crops

By Steve Stroth

Aug. 18 (Bloomberg) -- Orange juice rose to the highest price this month as Tropical Storm Fay was forecast to strengthen into a hurricane as it heads toward Florida, the world's second-largest orange grower.

Fay's maximum sustained winds were 60 miles (97 kilometers) per hour shortly before 8 a.m. Miami time, 10 mph faster than three hours earlier, the U.S. National Hurricane Center said in an advisory on its Web site. The storm was located over Cuba's north coast, just northeast of the tourist resort of Varadero and about 80 miles east of Havana. Fay was 100 miles south- southeast of Florida's Key West and heading north-northwest at 12 mph.

``Some strengthening is expected as the center of Fay moves over water,'' the center said. ``Fay is forecast to be approaching hurricane strength in the Florida Keys and to become a hurricane before it reaches the Florida peninsula.''

Orange-juice futures for November delivery rose 1.75 cents, or 1.6 percent, to $1.08 a pound at 8:26 a.m. on ICE Futures U.S., the former New York Board of Trade. The price earlier gained as much as 4.7 percent to $1.112, the highest for a most- active contract since July 29.

Florida produced almost 170 million boxes of oranges in the harvest that finished a month ago, up from a 17-year low of 129 million a year earlier, according to the U.S. Department of Agriculture.

Private citrus forecaster Elizabeth Steger this week projected a harvest of 150 million boxes in the season starting in October, citing a lower tree count. Louis Dreyfus Citrus Inc. of Winter Garden, Florida, said the crop may reach 156 million boxes. A box of oranges weighs 90 pounds (41 kilograms).

Most-active futures are down 13 percent in the last year and Aug. 5 reached the lowest price since September 2005 partly on expanding inventories.

Brazil is the world's largest orange producer.

For related news: Florida's orange harvest: NSE FLORIDA ORANGE HARVEST U.S. agricultural markets: TNI US AGMARKET