MIAMI (Reuters) ? Sub-freezing temperatures hit parts of Florida's citrus belt on Tuesday night, heating up the orange juice futures market even though damage to groves was isolated and not extensive.
"Approximately three quarters of the citrus belt has seen temperatures cold enough to result in frost, with about a quarter of the belt seeing a hard freeze," said Don Kenney, a senior agricultural meteorologist with MDA EarthSat Wether/CropCAST, a leading commodities weather risk consulting group.
While reporting "minor fruit damage and leaf burn" in some crop areas, Kenney said in a statement that damage was not expected to be significant or widespread and that temperatures should moderate quickly after Wednesday.
Florida Citrus Mutual, the state's leading growers association, also reported "cut ice in fruit and some leaf damage" portions of the citrus belt but said damage was not widespread.
"All in all I would not call it a non-event but in general the industry came through in pretty good shape," Citrus Mutual spokesman Andrew Meadows said in an e-mail.
U.S. orange juice futures rallied for a second day in a row on Wednesday, after reports on the latest weather developments in Florida.
The key March frozen concentrated orange juice contract on ICE Futures USA was up about 2.8 percent, trading at just under $1.78 a lb, by 11:40 a.m. EST (1640 GMT). If it closed for the day at that level, it would have gained 5.2 percent since it begin trading for the year on Tuesday, making it the market's biggest two-day gain since mid-October.
Typically, citrus can sustain damage when temperatures fall for four hours or more below 28 degrees Fahrenheit (minus 2 Celsius).
Todd Barron, a meteorologist with the National Weather Service in Tampa, said there were a handful of areas where that level was reached for extended periods overnight.
James Cordier, president of Liberty Trading Group in Tampa, Florida, said a hard freeze in Florida may have been of little concern to the market in the not too distant past but production levels have dropped enough to make any freeze potentially significant for the state's $9 billion citrus industry.
"We really don't have the luxury of losing 5, 7 to 10 million boxes on a freeze," said Cordier, whose firm actively trades orange juice options.
"Last year and the year before we had cold temperature into late January and early February, so if we did escape with minor damage or no damage last night, I think this is certainly a wake up call," Cordier told Reuters.
"The Jet Stream's been falling much lower than in the previous years and we have to keep an insurance premium, you know, a feeze premium in the market, until we get to March," he said.
"We could have $2 orange juice so easy this year," he added. (Additional reporting by Barani Krishnan; Editing by XXX)
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