Risk and Current technical analysis - how to win from Orange Juice Futures.

Orange Juice Commodity

The orange juice commodity is appealing to traders on the futures market for a number of reasons. One of the most important factors to consider is that orange groves tend to be most heavily farmed in the United States of America and Brazil. Since there are only two geographical regions that have industrial-scale production of oranges, it is easy to see the potential for those who wish to conquer the export market. There will always be a worldwide demand for the orange juice commodity, and the demand will inevitably always outstrip the supply.

Orange Juice Market

The main orange juice market is, and always has been, the US domestic market. Orange juice is renowned for its health benefits, namely its high quantity of vitamin C, and so can be seen being drunk in many settings. It is a popular accompaniment to continental breakfasts, and is also frequently provided to children in schools. In terms of production, Brazil is currently the worldwide leader. Florida was the primary orange juice exporter until 1962, but hurricanes and other severe weather systems damaged its ability to be competitive in orange juice trading. Brazil now currently supplies approximately 80% of the worldwide export of orange juice. Brazil also currently supplies the US with at least 50% of its imported orange juice.

Orange Juice Trading

In terms of orange juice trading and FCOJ prices, there are several factors to consider. The most salient point traders need to be aware of is that since there are only really two regions that produce orange juice, severe weather patterns can suddenly and catastrophically devastate crops. A drought in Brazil can significantly reduce the worldwide availability of FCOJ, and FCOJ prices will suddenly increase accordingly. Similarly, Florida and other US states can be prone to frost in the winter, which can also negatively impact crop yields. As Brazil and the US are on different hemispheres (Southern and Northern respectively), they experience these weather systems at different times: the drought season for Brazil occurs between July and November while the winter frost in Florida occurs between December and March. If both areas of production suffer misfortune one after the other, the potential for decreased supply and an inability for producers to meet global demand is suddenly very apparent.

Orange Juice - Current technical analysis

From September 29, 2015 to November 14, 2015 (33 trading days), the price has risen by over +32%. Then decreased by -8%, and this level was tested twice. Absolutely right level coincides with a Fibonacci 38.2 and EMA50, which is a strong buy signal. In the second test  the price formed reversal bar. The highest level since November 14 was 165.9. At the time of today is trading with an increase of about +3.5%. It is likely to see some fluctuation levels diagonal resistance, as confirming the breakthrough will be a good signal for long.

Futures

FCOJ futures are traded primarily at the Intercontinental Exchange (ICE), with the contract code OJ.

G.Hristov / Head of Fundamental Analyzes & Trader V.Lazarov