Commodities Corner: USDA estimate shows larger-than-expected Florida orange crop despite Hurricane Irma http://ift.tt/2i7P2ew

Orange-juice futures fell Thursday for the first time in four sessions as the U.S. Department of Agriculture’s estimate on the Florida orange crop came in larger than the market expected despite damage from Hurricane Irma.

The USDA estimate showed the Florida orange crop at 54 million boxes, down 21% from last season. That would be the lowest level in 71 years, according to a report from Bloomberg.

But a grower survey from Florida Citrus Mutual had predicted a 2017-2018 orange crop closer to 31 million boxes for the state in the wake of Hurricane Irma, which made landfall in south Florida on Sept. 10 and brought winds of up to 120 miles per hour to the state’s major citrus-producing regions.

“Traders were anticipating the effects of citrus greening and Hurricane Irma to reduce production even more,” said Darin Newsom, senior analyst at DTN. But “keep in mind this is an initial production estimate, with many more to come. Reductions can still be seen.”

Following the data, November frozen concentrated orange juice

OJX7, -2.86%

 declined by nearly 4 cents, or 2.3%, to settle at $1.589 a pound on the ICE Futures U.S. exchange. Prices, which were trading higher at $1.638 before the report, have gained nearly 7% month to date, but still trade roughly 18% lower for the year.

Some experts expressed doubts over the accuracy of the USDA report, which came just over four weeks after Hurricane Irma crossed the region.

“In my opinion, there is absolutely no way the USDA could produce an accurate estimate after Hurricane Irma,” Dan Richey, a former chairman of the Florida Citrus Commission, told MarketWatch shortly after the crop production report was released.

‘I believe the estimate released today is much higher than what will be ultimately harvested.’

Dan Richey, former chair of Florida Citrus Commission

“The fact is that one only has to walk through any grove and hear the fruit hitting the ground as it continues to drop off the trees due to wind and water damage,” he said. “The devastating effect of the hurricane will not be known until this harvest is complete, but I believe the estimate released today is much higher than what will be ultimately harvested.”

“We had a great crop and anticipated an increase over last year as tree health and fruit counts were up, but the hurricane changed all that,” said Richey.

In a statement, Michael Sparks, executive vice president and chief executive officer of Florida Citrus Mutual said he was “disappointed that the USDA did not delay the traditional October crop estimate until more data could be collected to fully assess the damage wrought by Irma.”

“Irma hit us just a month ago and although we respect the skill and professionalism of the USDA, there is no way they can put out a reliable number in that short time period,” he said.