Orange Juice is a liquid extract of the orange tree fruit which is produced by squeezing or reaming oranges. It became a standard consumption good in the world but the juice is not everywhere the same. Indeed, there are important differences in the way how the companies produce it.
Besides the most natural freshly squeezed unpasteurized juice, one distinguishes two major processed forms of the latter. The first is the”not from concentrate” (NFC) juice which is being pasteurized and then sold to consumers. The second is the frozen concentrated orange juice (FCOJ) which is also pasteurized, but then evaporated and frozen. Reconstitution of the jucie occurs by adding water to the freshly thawed FCOJ. As a matter of fact, FCOJ was developed 1948 at the University of Florida. Since then it has emerged as a soft commodity and future contracts have traded in New York since 1966.
Even though the market share of the NFC juice has surpassed that of the FCOJ in 1980s, the easy-to-ship FCOJ remains the industry’s benchmark. Today, one can trade Orange Juice futures at New York Board of Trade in contracts of 15’000 pounds of juice solids under the ticker OJ.
Currently, we see other soft commodities like coffee, cocoa and sugar turning higher after a long period of depressed prices. Based on the correlation within group of softs, one should expect the orange juice to turn higher as well. In particular, wave structure of OJ #F supports that bullish view. Will orange juice become another expensive basic food?
Orange Juice Monthly Elliott Wave Analysis 03.28.2021
The monthly chart below shows the FCOJ front contract OJ #F at NYBOT (e-Signal ticker: JO). From the important low in May 2004, the prices have developed a cycle higher in blue wave (I) of a super cycle degree. Hereby, wave (I) has demonstrated a leading diagonal pattern and has ended in October 2016 at 227.50. From the all-time highs, a correction lower in wave (II) has unfolded as an Elliott Wave double three pattern. In 2.5 years, OJ #F has become cheaper by 60% reaching 90.60 level. It is the preferred view that an important bottom in May 2019 has been set and the correction has ended. From the lows, a new rally in prices within blue wave (III) may have already started.
For 2021-2030, the expectations are to break to the new all-time highs. The target for wave (III) will be 264.00-371.20 area. From current levels, the orange juice can, therefore, double to tripple in price.
Orange Juice Weekly Elliott Wave Analysis 03.28.2021
The weekly chart below shows in more detail the decline lower in wave (II) and the first stages of the wave (III). From the 90.60 lows, we see the advance higher as a leading diagonal in wave ((1)) ended at 132.00 highs. From there, a correction lower in wave ((2)) may be still in progress. While below 129.50 highs, it can see 102.70-90.60 area, before turning higher again.
Investors and traders can be, therefore, looking to buy FCOJ in a pullback from 102.70-90.60 area. While short-term target will be above 132.00, in a long-term, investors can be looking towards 264.00-371.20 area.
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