Current weather conditions in the main "orange" state Florida remain mostly quite favorable, with dry weather and moderate temperatures . Industry analysts point out, however, the need for rain, because irrigation structures work at full capacity. January harvesting is finishing, but it is reported that the size of the fruit in this season is very small. In Brazil, currently in the areas of orange plantations temperature is slightly above average - analysts note excessive dryness and talk about reducing the production of fruit this year.
Meanwhile, with the end of the first decade of February seasonal rise in prices is expected for contracts of orange juice (ticker JO or OJ). Fundamentally, this growth is usually due to the end of the winter in Florida when the trees and young fruits of the future April's harvest are particularly vulnerable to late frosts in February! The most important periods of the collection of american orange harvest - January period and mid-April to mid-June. Moreover, the summer heat in the U.S. is not as scary because modern irrigation systems successfully solve the problem. But the frost (for obvious reasons) is much more difficult to fight.
The impact on the orange price have substitutes of soft drinks, as well as possible state purchase of orange juice for distribution to the school lunch program. The chart below shows seasonal trends of May-July futures contract OJK-OJN.
Seasonal growth is up to March 15th. 9 times (during last 13 years) positions were closed with average profit 50 ticks ($7.5/tick). Let's put a buy limit at -1.5 and if it will not be filled by February 10th - we'll buy at market. Go out of position is it closes below -2.1-2.2.
