The nice 1983 Eddie Murphy/Dan Aykroyd movie Trading Places options two duffers pulling off a large commodity futures rip-off. It was orange juice futures. They made a fortune by betting on the orange crop in Florida.
Thanks to Hurricane Irma carving a path of destruction by means of Florida, you are able to do the identical factor in the present day.
After Brazil, Florida is the world’s second-largest producer of oranges.
The orange juice trade is in a large decline. Sales fell 14% – a couple of $98 million fall from 2012 to 2016. Some meals exchange-traded funds that after held futures not use them as an funding.
It does not assist that we now know that it’s dangerous for you. It has the dietary worth of soda.
Business Insider known as orange juice the “biggest con of your life.” That’s necessary, because the U.S. is the world’s largest client by many occasions, over and above another nation on earth. We consumed over 630,000 metric tons of the drink final 12 months.
Irma’s Impact
Frozen orange juice futures tanked over the previous 12 months. After peaking in October 2016 at $225, the JPMorgan Orange Juice Price Index fell 44% to a low of $125 in July 2017.
The value jumped 21% in two weeks as Hurricane Irma grew and took goal at Florida.
The Florida orange crop appeared notably robust this 12 months. Shannon Shepp, the chief director of the Florida Department of Citrus, wrote:
Before Hurricane Irma, there was a great likelihood we’d have greater than 75 million bins of oranges on the timber this season. We now have a lot much less.
To put that in perspective, final 12 months’s crop, the worst since 2005, was about 77.9 million bins. That crop bought for $800 million. In Florida, 90% of the oranges change into juice.
This 12 months, the orange crop appears to be like like it is going to be the bottom in 50 years. As you may think about, that pushed the value of futures up.
Sadly, until you commerce commodities, common traders battle to get in on this place. One means is the Elements Agriculture Total Return ETN (NYSE: RJA). It holds 1.8% of its property in orange juice futures.
That’s about one of the best ways I discovered to commerce what could possibly be a pleasant winner in orange juice. That’s typical with these traits. Sometimes, it is exhausting to discover a strategy to revenue from them, even once you discover a fantastic alternative.
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