Before Thursday 21 January, orange juice had had only two winning sessions this month, losing 17% in that span. Yet, orange juice prices have now gained for a third straight session, the longest rally in two months and a possible sign of a bottom after a recent collapse. Florida producers are responding to soft demand with major supply cuts and sellers are retreating from the market, a trader and brokers said.
Florida production is dropping by about half from a year ago. The U.S. Department of Agriculture estimates Florida's orange crop is likely to be the smallest since the 1960s.
''There's grow-production being lost," said Kevin Sharpe, owner of brokerage Basic Commodities Inc. in Winter Park, Fla. "You don't bulldoze a grove and it comes back next year."
Prices are about 10 to 20 cents below fair value, said James Cordier, founder of Tampa, Fla.-based asset manager optionsellers.com.
"Orange juice we feel is a really good buy down here," Mr. Cordier said. "The supply simply doesn't justify prices at this level."
