Like I said on Thursday, frozen and concentrated orange juice futures took a mighty plunge. They dropped 9%, closing at 246.70 cents/lb. That was the largest single-day drop on record, accomplished during one trading day on the Intercontinental Exchange. This decline came after news spread that orange juice would be spared from the tariffs that the United States placed on Brazilian goods.
As a direct result, the U.S. government has exempted nearly 700 products from these tariffs that have hurt Brazilian industry. With Florida’s orange groves devastated by natural disasters, one of the significant commodities in this exemption is orange juice. The timing of this tariff relief, just days after the announcement of new market access for U.S. The announcement sent shockwaves through the futures market, causing a precipitous decline in the price of orange juice.
At one point in Thursday’s trading session, the futures price fell as low as 246.70 cents per pound. This drop illustrates just how powerful the tariff exemption news has been. Traders and analysts obsess over these fluctuations as they can be a sign of deeper market trends and consumer demand. The Intercontinental Exchange has become one of the primary forums for these types of exchanges, and the ICE is where orange juice is traded in wholesale quantities.
The implications of this tariff exemption go much deeper than short-term price impacts. This opens up new opportunities for importing Brazilian orange juice. As expected, we may now be on the cusp of a new wave of competition to enter the U.S. market. Overview Brazil is the world’s largest producer of orange juice. This exemption would create a major market distortion that would eventually force domestic producers out of the market or drive their pricing strategies.