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Up But Pares Gains On Commodity Weakness

ICE FCOJ Review: Up But Pares Gains On Commodity Weakness

DOW JONES NEWSWIRES

September frozen concentrated orange juice futures rose slightly Thursday, but closed well off of their highest levels of the day, as follow-through buying from recent Florida crop estimates supported the market - along with a potential storm threat in the Atlantic, traders and analysts said.

ICE Futures U.S. September orange juice rose 80 points to settle at $1.0425, and November added 55 points to $1.0775 a pound.

"We were up early on some follow-through buying from yesterday's gains, as traders digest these new crop estimates, but I think the sell-off in commodities pressured us later in the day," a broker said.

A widespread commodity sell-off, precipitated by lower crude oil and precious metals, spilled over into orange juice and took prices off of nearly two-week highs and their best levels of the session.

However, traders are still talking about Wednesday's release of private crop estimates for 2008-09 Florida orange production, which were below what most analysts had expected.

Noted citrus analyst Elizabeth Steger, president of Citrus Consulting International, estimated the 2008-09 Florida orange crop at 150 million 90-pound boxes, when many analysts had expected at least 160 million to 175 million, trade sources said.

The new estimate is down nearly 20 million boxes from the recently completed 2007-08 crop, which the USDA pegged at 170 million boxes.

Later Wednesday after the market close, juice processing giant Louis Dreyfus projected the crop at 156 million boxes, essentially confirming Steger's low estimate.

A lower tree count due to loss from crop diseases citrus canker and greening led to the decline in production estimates, analysts said. Steger used a tree count of 55.8 million, down from the U.S. Agriculture Department's 57 million count issued in April.

FCOJ futures could easily rise to the $1.1500-$1.2000 area based on the more bullish production figures, said James Cordier, analyst and founder of Optionsellers.com in Tampa.

He also explained, however, that high orange juice stocks and weak demand could prevent prices from rallying too far too fast.

Meanwhile, traders continue to watch a low pressure system near the Virgin Islands. Hurricane reconnaissance aircraft are currently investigating the system to see if it has turned into a tropical depression, National Hurricane Center forecasters in Miami said.

FCOJ open interest Wednesday rose 128 contracts to total 31,943, ICE reported. Rolling was fairly active as traders liquidated 582 Septembers and added 425 to the November position ahead of the Sept. 2 first notice day.

Futures volume is pegged at 2,622 lots, with 536 calls and 156 put options traded.

-By Tom Sellen, Dow Jones Newswires; 913-322-5177; tom.sellen@dowjones.com

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