Orange juice is one of the only actively traded contracts in the futures markets that’s based on a tropical fruit: oranges. Oranges are widely grown in the Western Hemisphere, particularly in Florida and Brazil. Brazil is by far the largest producer of oranges, although the United States — primarily Florida — is also a major player.
| Country | Orange Juice Production (Tons) |
|---|---|
| Brazil | 18,389,000 |
| United States | 9,120,000 |
| India | 4,396,700 |
| Mexico | 4,306,600 |
| China | 3,450,120 |
Source: United Nations Statistical Database
Because oranges are perishable, the futures contract tracks frozen concentrated orange juice (FCOJ). This particular form is suitable for storage and fits one of the criteria for inclusion in the futures arena: that the underlying commodity be deliverable. This contract is available for trade on the ICE. The ICE includes two versions of the FCOJ contract: one that tracks the Florida/Brazil oranges and another one based on global production.
Consider the contract specs of FCOJ on the ICE:
FCOJ-A (Florida/Brazil)
Contract ticker symbol: OJ
Contract size: 15,000 pounds
Underlying commodity: FCOJ from Brazil and/or Florida only
Price fluctuation: $0.0005 per pound ($7.50 per contract)
Trading months: January, March, May, July, September, and November
FCOJ-B (World)
Contract ticker symbol: OB
Contract size: 15,000 pounds
Underlying commodity: FCOJ from any producing country
Price fluctuation: $0.0005 per pound ($7.50 per contract)
Trading months: January, March, May, July, September, and November
The production of oranges is very sensitive to weather. For instance, the hurricane season common in the Florida region can have a significant impact on the prices of oranges both on the spot market and in the futures market. You can clearly see a spike in the price of the FCOJ contract during the 2004–2005 period, which saw heavy hurricane activity. Be sure to consider weather and seasonality when investing in FCOJ futures.
