June 17 (Bloomberg) -- The Brazilian Orange Belt’s crop, the world’s largest, may rise for the first year in three in 2011 on drier weather, said Sucocitrico Cutrale Ltda. and Louis Dreyfus & Cie SA, which represent 45 percent of global output.
The harvest may rise as much as 17 percent to about 336 million 90-pound boxes next year, Carlos Viacava, corporate director at Cutrale, which makes three out of every 10 glasses of orange juice consumed, said yesterday in an interview in Sao Paulo. Louis Dreyfus, the world’s No. 4 producer, expects a rise of about 11 percent to 310 million boxes, Kenneth Geld, head of the company’s citrus business, also said in an interview.
Orange-juice futures have jumped 12 percent in New York this year on speculation of a lower crop in Florida and Brazil. Cutrale said in May this year’s crop in Brazil would be the lowest in seven years because of rains, which hurt flowering. Prices may decline in coming months once the hurricane season threatening the crop in Florida ends, Viacava said.
“Prices are very expensive,” Viacava, 69, said at his office in Sao Paulo. “These prices will go down.”
Orange-juice futures for September delivery fell 0.10 cent, or 0.1 percent, to $1.4450 a pound at 12:40 p.m. on ICE Futures U.S. in New York. Futures will likely hover near current levels in the next few months because of this year’s reduced supplies and the risk of hurricanes hurting trees, according to Viacava.
Rising production costs in Brazil may also limit price declines, Geld also said in Sao Paulo. Production in Brazil currently costs about $1.55 per pound and is sold at about $1.9 per pound in Europe, he said.
Costs have risen about 30 percent in the last five years on higher labor expenses in Brazil and the spread of citrus greening, a bacterial disease that kills the trees, Geld said.
Brazilian producers will harvest 286 million boxes, the lowest since 2003, in the states of Sao Paulo, part of Minas Gerais and Parana this year, Viacava said last month. Brazil produced 281 million boxes in 2003. According to Cutrale, next year’s harvest could be the highest since 2007, when the Latin American nation produced 358 million boxes.
Futures dropped for the first time in four sessions in New York June 15 on the diminishing threat to Florida’s citrus crop from hurricanes. A low pressure system in the mid-Atlantic probably won’t develop into this season’s first tropical storm, the U.S. National Hurricane Center said. Florida is the world’s largest orange producer after Brazil.
“Prices will swing along with news about the hurricane season,” Viacava, himself a citrus grower, said.
Cutrale, based in Araraquara, Brazil, was founded by Italian immigrant Giuseppe Cutrale, who used to sell oranges in a street market in Sao Paulo and later decided to export fresh fruits to Europe. A privately held company, it owns orange groves and processing plants in Florida and Sao Paulo and port terminals in Europe and Asia. It supplies orange juice to McDonald’s Corp. and Coca-Cola’s Minute Maid.
Louis Dreyfus & Cie SA, based in Paris, accounts for more than 15 percent of global production, according to its website. The company, with facilities in Florida and Brazil, produces about 83 million boxes of oranges and 330,000 tons of juice a year.
--With reporting by Elizabeth Campbell and Debarati Roy in New York and Rudy Ruitenberg in Paris. Editors: Dale Crofts, Carlos Caminada