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Column: Orange-juice futures wake up

Breitinger

Orange-juice futures shot sharply higher this week on fears the nationwide cold snap could damage Florida’s sensitive orange groves.

Although the Sunshine State was spared from the blisteringly cold temperatures that spread across northern states, temperatures did plunge into the 30s, which can put orange groves at risk.

By the end of the week, it appeared that most Florida groves escaped freezing temperatures, and the market’s focus shifted to a USDA report that was going to update traders on the state of the U.S. orange crop.

Leading into the report on Friday morning, there was a sudden 10-cent move that some traders described as being reminiscent of the Duke Brothers in the 1983 film "Trading Places."

The market held onto half of the rally after a USDA report showed that this year’s orange-juice crop would be smaller than previously expected, trading Friday near $1.47 per pound.

Oats rally on logistical issues

During the week, oats futures gained more than 50 cents per bushel (15 percent), topping out at more than $3.95 a bushel.

Amazingly, oats prices neared that of corn, which is usually a much more valuable commodity. Just last year, corn was worth more than twice as much as oats.

The rally in oats came in spite of a large oat crop last year in the U.S. and Canada. Prices are rising primarily because of logistical issues -- farmers can’t get their oats quickly enough to end users such as food companies or livestock feeders, which is creating a short-term shortage and helping prices surge.

At midday Friday, the USDA released a slew of reports about the grain markets, which initially caused a rally in the corn and soybean markets, seemingly confirming an old adage “oats knows” as the oats markets began rallying well before the rest of the grain complex.

Natural gas falls to one-month low

Despite record-breaking cold temperatures this week, natural gas prices collapsed, a sign too many investors had bought into the market before the cold hit.

When demand fell short of expectations, traders liquidated, driving prices down to a one-month low on Friday.

Trading near $4 per million British thermal units, natural gas prices are still relatively high, and weather in the coming weeks could affect prices significantly.

Walt Breitinger is a commodity futures broker in Valparaiso. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

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