Orange juice futures contracts plummeted Monday after investors became more confident Florida's crop was spared major damage from freezing temperatures over the weekend.
Traders sold off March contracts for frozen orange juice concentrate in droves. Prices fell 19.30 cents, or 12.8 percent, to settle Monday at $1.3185 a pound.
Despite the apparent confidence from traders, the trade association Florida Citrus Mutual said it was too early to tell how much of an effect the recent freezing temperatures had on orange groves throughout the state.
Michael Sparks, CEO of Florida Citrus Mutual, said in a statement that it might take weeks to figure out if cold temperatures Sunday night and early Monday morning caused any permanent damage to the citrus trees.
So far there have been anecdotal reports of frozen fruit and leaf and branch damage, Sparks said. Oranges suffer damage when the temperature falls below 28 degrees for at least four hours.
Carlos Sanchez, an analyst with commodities research firm CPM Group in New York, said the volatility seen in trading in recent days could continue, especially if there is another round of cold weather or if it is determined that more damage has occurred to trees than previously thought. OJ prices surged 17 percent last week because of concerns a cold snap would hurt production.
The US Department of Agriculture will update its crop forecast Tuesday, which will provide more insight into this year's crop. The USDA will make monthly updates through the end of July.
If the supply of fresh oranges declines, it can send demand for frozen orange juice concentrate sharply higher, leading to higher prices for OJ at the grocery store.
Meanwhile precious metal prices soared as the dollar weakened and demand expectations grew.
Gold for February delivery jumped $12.50 to $1,151.40 an ounce. Platinum for April delivery surged $21.90 to settle at $1,592.50 an ounce, while palladium for March delivery rose $6.80 to $431.95 an ounce.
A continued weakening of the dollar helped gold prices because commodities — which are traded in dollars — become cheaper for foreign investors when the dollar falls. The ICE Futures U.S. dollar index, which measures the dollar against six other major currencies, fell 0.6 percent.
Sanchez said gold demand is also increasing as India's wedding season approaches next month. India is the world's largest consumer of gold, with wedding season being a popular period for purchasing gold products.
Platinum and palladium rose as expectations grew for strong demand this year, especially in China, Sanchez said. A new report showed Chinese exports jumped by nearly 18 percent in December, breaking a string of 13 straight monthly declines.
Those metals are used for catalytic converters in automobiles, so an increase in auto production worldwide this year should also push demand higher, Sanchez said.
Energy prices fell modestly. Benchmark crude for February delivery fell 23 cents to settle at $82.52 a barrel on the New York Mercantile Exchange, despite signs of strong demand from China and a weak dollar.
In other Nymex trading in February contracts, heating oil fell 2.02 cents to settle at $2.1801 a gallon while gasoline fell 1.26 cents to settle at $2.1427 a gallon. Natural gas futures fell 29.5 cents to settle at $5.454 per 1,000 cubic feet.
In other trading, wheat rose 4 cents to settle at $5.725 a bushel. Soybeans fell 11.5 cents to $10.105 a bushel as prices continue to fall from recent highs seen early last week. Corn fell half a cent to $4.225 a bushel.
Tuesday's crop report could also affect grains trading in the coming days.
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