Wednesday, October 25, 2023

Orange Juice Prices Are at Record Highs—and Could Keep Climbing (article illustrates supply and demand principles)

Prices at the grocery store are up more than 10% from last year

By Hardika Singh and Kirk Maltais of The WSJ

"Orange juice prices have been climbing as citrus groves have faced a spreading greening disease and extreme weather. [those two factors cause supply to shift to the left, raising prices] Prices for frozen concentrate orange-juice futures have more than tripled since late 2021 and emerged as one of this year’s top-performing commodities, with prices setting records week after week. On Friday, they jumped to a fresh record high of $3.91 a pound, up from $2.11 last October, according to FactSet.

In grocery stores, a gallon of orange juice on average cost $9.18 during the four-week period ending Oct. 7, up more than 10% from the same time last year, according to data from the Florida Department of Citrus and Nielsen.

Analysts say rising prices could drive away shoppers, deepening the yearslong slide in orange juice demand [this is not a decrease in demand-the demand line is not moving-it is a decrease in quantity demanded] as Americans reach for a growing variety of alternatives in the beverage aisle, including those with less sugar. 

This year, orange production from the Sunshine State is expected to increase from 2022’s hurricane-marred output [another decrease in supply or leftward shift of the supply line] but is still down more than 50% from two years ago, according to the Agriculture Department. Brazil, the world’s largest orange producer and the source for roughly 70% of the world’s orange juice, has also been hit by the citrus-greening disease [another decrease in supply or leftward shift of the supply line] and won’t be able to fill much of the supply gap, analysts said."

"In Florida, farmers say trees are slowly recovering from Hurricane Ian’s devastation, but that there are no signs of relief from the disease, which can render fruit from infected trees bitter and impossible to use for juice."

"Many Florida farmers have left the business, Johnson said, with some pivoting to growing other fruits or raising cattle." [when the price of good A falls, supply of good B rises, if firms can produce more than one good]

"Higher labor costs are also hurting bottom lines" [another decrease in supply or leftward shift of the supply line]

Related posts on supply and demand:

 Apartment Rents Fall as Crush of New Supply Hits Market (2023)

Egg Prices Surge to Records as Bird Flu Hits Poultry Flocks (2022)

How Supply And Demand Have Affected Beef Prices Recently (2017)

Cold Snap Sparks Record Rise in Natural Gas Prices in Asia (2021)

Supply Means Producing A Good And Customers Being Able To Purchase It (2018)

Are Expectations Helping To Raise The Price Of Lithium? (2021)

Is there a shortage of homes? (2020)

Farmers might be reducing supply of corn now in expectation of higher prices this fall (2019)

Used vehicle prices up as supply sinks, but relief is coming (2021)

What Chocolate Shortage? Cocoa Prices Steady as Record Output Projected (2019)

Supply & Demand And The Price Of Eggs (2017)

Another Journalist Misunderstands Supply And Demand (2009)

Fastest-Rising Food Prices in Decades Drive Consumers to Hunt for Value (2020)

Supply, Demand and the High Price of Vanilla (2019)


New Zealand sheep farmers turn to cattle as the world price of milk rises (2017)

Why has the price of eggs risen so much? (2023)

When demand for one good falls (gasoline and ethanol) leads to an increase in price for other goods (beer and soda) (2020)

Egg market seems to act just the way supply and demand predict (2019)

Chicken Shortage Sends Prices Soaring, and Restaurants Can’t Keep Up (2021)

India sets a price floor for sugar and gets a surplus (2018)

Drivers Throttle Back as Gasoline Prices Rise (2022)

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