Orange-Juice Prices Rises as Commodities Gain on Bank Bailout

By Ron Day

Oct. 14 (Bloomberg) -- Orange-juice prices rose as commodities climbed after U.S. Treasury Secretary Henry Paulson urged banks receiving $250 billion in capital injections from the government to use the funds to spur economic growth.

The Reuters/Jefferies CRB Index of 19 raw materials gained as much as 2.2 percent, and orange juice increased for a second straight day. Money-market rates in London fell on measures taken by the U.S., the U.K., Germany and France to restore confidence in the global financial system. Shares in Europe and Asia rallied.

``There will be credit,'' said Sterling Smith, a vice president at brokerage FuturesOne in Chicago. ``Stability in the equity markets is probably helping.''

Orange-juice futures for November delivery rose 2.95 cents, or 3.8 percent, to 81.05 cents a pound on ICE Futures U.S. in New York. The most-active contract climbed 2.7 percent yesterday.

Prices still have tumbled 44 percent this year. On Oct. 10, prices touched 72.1 cents, the lowest since November 2004.

The dollar's decline against a basket of six major currencies also increased the allure of U.S. commodities, Smith said. The dollar index has dropped 2.2 percent this week.

Tropical Storm Omar formed south of Puerto Rico, and forecasters say it will bear down on the island and possibly become a hurricane. Tropical storms and hurricanes often drive orange-juice prices higher, triggering speculation that crops in Florida, the world's second-biggest orange grower, may be damaged.

Brazil is the largest orange producer.

To contact the reporter on this story: Ron Day in New York at rday1@bloomberg.net.