Frozen concentrated orange juice (or FCOJ-A) futures this week were trading broadly lower compared to the levels a week ago. Note that these contracts are the prices for A-grade frozen concentrated orange juice.
The current orange juice near-month futures, expiring on September 11, 2017, were trading almost 4.0% lower at $1.28 per pound compared to last week’s average of $1.34 per pound. Orange juice futures were trading significantly lower compared to a year ago and were far from the peak of $2.20 per pound toward the end of 2016. Year-over-year, FCOJ-A contracts are trading almost 31.0% lower.
Companies (XLP) that use orange juice, including PepsiCo (PEP), Dr Pepper Snapple (DPS), and Coca-Cola (KO) (COKE), sold through various brands under their respective subsidiaries, may be positively impacted by falling orange juice prices.
From the above graph, we can see that the current forward curve has shifted slightly lower compared to last week for all maturities in the future. Notably, the near-term maturities until April 2018 have been hit harder than the farther-term maturities. To put it in perspective, frozen concentrated orange juice contracts expiring in September 2017 fell 3.0% week-over-week. The ones expiring in May 2020 fell only 1.0% over the same period.
Next, let’s look at cotton futures.