Tuesday, January 10, 2012

OJ on the Run

Reports WSJ:
Futures of frozen orange-juice concentrate surged to a record Tuesday on news that the U.S. Food and Drug Administration is testing imported orange juice for a fungicide that hasn't been approved for use on oranges in the country, and saying it will order the beverage removed from the market if it poses a public health risk.

The market rallied on concerns that the presence of the fungicide could crimp supplies. Frozen orange-juice concentrate for January delivery rose 18.8 cents, or 9.7%, to settle at $2.1275 a pound, an all-time high, on the ICE Futures U.S. exchange. The more actively traded March contract jumped 20 cents, or 11%, to $2.0775...

The Environmental Protection Agency completed a preliminary risk assessment and concluded that consumption of orange juice with carbendazim at the low levels that have been reported doesn't raise safety concerns, the FDA said. The FDA won't recall the orange juice with trace amounts of the chemical.

"The FDA does not intend to take action to remove from domestic commerce orange juice containing the reported low levels of carbendazim," it said in the letter.

However, the FDA said it is conducting its own tests for carbendazim in imported orange juice in U.S. ports. "If the agency identifies orange juice with carbendazim at levels that present a public health risk, it will alert the public and take the necessary action to ensure that the product is removed from the market," the FDA said in its letter.

"We're testing everything that's coming in," Ms. Ward said. "All imported orange juice ... [is] being sampled at the port."
It's not so much the news here, but the reaction to the news that is the key. Only in bull markets, generally inflationary periods, do you see such upside action to all-time highs with the limited news on supply that is coming out.

The FDA said the fungicide was used on the 2011 orange crop in Brazil, the world's biggest producer of orange juice, to combat a mold that grows on citrus trees.

Florida oranges produce about three-quarters of U.S. orange-juice concentrate supplies, and imports cover the rest. About 75% of those imports come from Brazil.

6 comments:

  1. Nice. I had envisioned a post about a former Heisman winner in a white Bronco.

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  2. Orange juice, which contains sugar, is poisonous to humans anyway.

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  3. Sounds like a Hollywood movie plot in the making.

    http://en.wikipedia.org/wiki/Trading_Places#Plot

    Having unsuccessfully attempted suicide by shooting himself with a semi-automatic pistol (which fails to go off till after he throws it away), Winthorpe again attempts suicide in Ophelia's apartment by overdosing on pills. Valentine, Ophelia and Winthorpe's former butler Coleman (Denholm Elliott) nurse him back to health and inform him of the Dukes' experiment. On television, they learn of a Clarence Beeks (Paul Gleason) transporting a secret report on orange crop forecasts. Winthorpe and Valentine recall large payments made to Beeks by Duke & Duke and realize that the Dukes are planning to obtain this report to corner the market on frozen orange juice. The group agrees to disrupt their plan as revenge.
    Learning of Beeks' travel plans, the four get aboard his train (aboard which a New Year's Eve costume party is also being thrown) to switch the report in Beeks' possession with a forgery. Beeks uncovers their scheme and attempts to kill them. He fails, because of the interference of a drunken partier in a gorilla costume, and is subdued, and the group dress him in a gorilla costume and lock him in a cage with a real gorilla. The forgery is then delivered to the Dukes, while Winthorpe and Valentine head to the World Trade Center to buy out the Dukes, Coleman and Ophelia providing the necessary money.
    On the commodities trading floor at Four World Trade Center, the Dukes commit all their holdings (Randolph doing so against Mortimer's advice) to buying frozen concentrated orange-juice futures contracts; other traders follow their lead, inflating the price. Before the real crop report is declassified, Valentine and Winthorpe sell futures heavily at the increased price. After the forecast that the orange crop will be normal, the price of orange-juice futures plummets. Valentine and Winthorpe successfully cover their short sales, turning a profit of more than three hundred million American dollars. The Dukes fail to meet a margin call and are ruined, being left owing three hundred and ninety-four million American dollars for futures now worth a fraction of what they contracted to pay. Valentine and Winthorpe explain to the Dukes that they had made a wager on whether they could get rich while making the Dukes poor simultaneously. Valentine collects $1 from Winthorpe (who had believed their revenge plan would fail) while Randolph collapses holding his chest, a heart attack having seized him, and Mortimer shouts angrily at his brother about their failed plan.
    Beeks and the gorilla are last seen being loaded onto a ship headed to Africa, while Valentine, Winthorpe, Ophelia, and Coleman relax on a luxurious yacht in an un-named tropical locale.

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  4. SELL! SELL! SELL!

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  5. OJ on the run? OJ will give you the runs with all that carbendazim - and thats not all!

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  6. Dumping duties may have just been removed from Brazilian FCOJ. I'd think that might be a bigger cause of why this is being brought up.

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