Orange Juice Futures

The way in which an orange juice futures contract works is much the same as any other commodities future in that the contract is agreed to by both the buyer and the seller with the contractual agreement to complete the transaction at some future predetermined time at the specified future price. Of course the difference is in the commodity, which in this case is orange juice. However, in terms of a futures contract the futures actually refers to frozen concentrated orange juice which is notated as FCOJ (frozen concentrate orange juice) on the exchanges. The reason for this is quite logical as orange juice is perishable and the contract is for a future delivery of this commodity. Following are some characteristics of an orange juice futures contract.

Ticker Symbol and Exchange
There probably isn’t a person on earth, at least an English speaking person, who doesn’t recognize the letters ‘OJ’ as being orange juice. So then, it should come as no surprise that the ticker symbol is OJ and orange juice futures are listed on the ICE futures exchange. ICE is the soft commodity exchange in the U.S. with markets in cotton, sugar, cocoa, coffee and needless to say, orange juice concentrate.

Orange Juice Futures Traded on ICE
ICE, Intercontinental Exchange, trades between the hours of 7 AM and 3:15 PM, Monday through Friday. A contract is for 15,000 pounds of OJ solids and the months for orange juice futures contracts are January, March, May, July, September and November. While the exchange is open year round, orange juice futures are only traded during those particular months. Remember that soft commodities such as OJ are seasonal which makes sense that orange juice futures would only be listed on the exchange certain months out of the year. Orange juice quotes are priced per pound and the tick size is five one-hundredths of a cent per pound. Also, keep in mind that the last trading day is the 14th business day prior to the final business day of the trading month.

Interesting Facts about Orange Juice
Believe it or not, the process for making frozen concentrate is less than a 75 years old and was first invented in Florida during the year 1947. Also, the United States exports a very minute portion of the FCOJ that it produces as most of it is used right here in this country. Another interesting fact is that most of the oranges from California are produced for eating while the oranges from Florida are grown with the intention of being used for frozen concentrate or fresh orange juice. At one point the United States led the world in the production of oranges but within recent years Brazil has taken over that honor. In fact, between the United States and Brazil, approximately 60% of the global supply of oranges is produced, but Brazil exports at least 80% of the world’s frozen concentrate. Note that approximately 70 to 75% of the oranges grown in the US are grown with the intent of producing FCOJ. Other countries/regions that produce a significant amount of oranges are Spain, Mexico, Italy, India, Iran, China, Indonesia and Egypt.

As a reminder, orange juice futures are greatly affected primarily by climatological factors and secondarily by geopolitical events. The reason for this is that early or late freezes along with tropical storms in Florida can significantly destroy South and Central Florida groves where that 70% of FCOJ is produced. While global strife may impact imports/exports, to date climatological events are what you should watch for when investing in orange juice futures as having the greatest impact on profits or losses.

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