Agricultural Finance: From Crops to Land, Water and Infrastructure

Chapter 10Orange Juice, Livestock, Dairy, and Fishery

‘I feel it is an obligation to help people understand the relation of food to agriculture and the relationship of food to culture.’

Alice Waters, chef and author

10.1 Orange Juice

It is an old and important Futures market in the USA – orange juice is denominated as OJ – made famous by the movie Trading Places, which illustrates that agricultural commodity markets are central to the lives of human beings and that early information on weather plays a crucial role when trading agricultural Futures. In the same vein, the interesting paper ‘Orange Juice and Weather’ by R. Roll (1984) demonstrates in a statistical manner that orange juice Futures prices at a given moment are better predictors of the weather in Florida than the contemporaneous information releases of the Meteorology Office in the USA. Citrus represents a very important group in world fruit production. It constitutes roughly a quarter of the total fruit volume. Brazil, the United States, China, and Spain account for 53% of world production, and the first 10 countries for 71%.

The international market for citrus is divided into two types of products: fresh fruit and juices. One-third of citrus world production is transformed into juices. Brazil (the state of Sao Paulo) and the United States (the state of Florida) are the number one regions in the world for citrus juices, in particular orange juice, and account for 75% of the transformed citrus volume. Italy and Mexico ...