Hurricanes to threaten....Organge Juice?

YouTube · #1 Postby **hurricanetrack** » Mon Jul 30, 2007 10:53 am

Look at what this article says. Wow, that's a heck of a statement and the cost of OJ went up with it! Wow, I thought only oil was tied to fantasy hurricane threats. Better go to the store now and get my OJ while it is stil affordable.

http://www.mcall.com/business/local/all ... 1672.story

#2 Postby **JonathanBelles** » Mon Jul 30, 2007 11:01 am

OJ prices went through the roof in 2004 when those 3 hurricanes crossed the state right through the orange groves.

YouTube · #3 Postby **hurricanetrack** » Mon Jul 30, 2007 11:26 am

THAT I can understand. But the prospect of hurricanes is what bothers me. There is not even a tropical depression in the Atlantic today- so why speculate that OJ may be impaced by storms and hurricanes that do not even exist!?!?!?!? That sucks.

#4 Postby **Trader Ron** » Mon Jul 30, 2007 11:48 am

What the article doesn't tell you, is that OJ futures are down from 210 in January. Add to that, the futures were very oversold.

The price of Oranges have risen, but OJ hasn't risen nearly as much.

#5 Postby **terstorm1012** » Mon Jul 30, 2007 11:49 am

that's an exceptionally poorly written article...(saw this at Wunderground)

gtalum · #6 Postby **gtalum** » Mon Jul 30, 2007 12:52 pm

hurricanetrack wrote:THAT I can understand. But the prospect of hurricanes is what bothers me. There is not even a tropical depression in the Atlantic today- so why speculate that OJ may be impaced by storms and hurricanes that do not even exist!?!?!?!?

There is a finite orange crop that can be grown on the acreage available. To make a profit, the farms need to get a certain minimum total income from their crops. So you arrive at a price per acre of oranges. Now if some of those acres of trees are damaged, now you have to spread those costs over fewer acres to cover the fixed costs. Now, imagine you are a farmer, and have to predict how many acres of oranges you will have available to sell at harvest time. If there's a threat of a hurricane, you're going to raise your prices to cover that risk, or else risk going bankrupt. You can't be reactionary and wait until after the hurricane has happened to adjust your pricing.

The same works for oil, crops, metals, etc.

Commodities prices change based on threats to supply. It's a necessary fact of life.

Hurricanes to threaten....Organge Juice?

Hurricanes to threaten....Organge Juice?

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