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.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 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."
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.