This is why orange juice is becoming more expensive
The prices of agricultural raw materials have fallen significantly since their peak this year, which can be partly attributed to falling gas prices. Fertilizer, the production of which requires gas energy, is one of the main costs for farmers. As a result, corn, wheat and soybean prices fell by 30%, 27% and 12% in dollar terms.
Raw material prices are also affected by the dollar exchange rate. A strong dollar encourages non-American farmers to increase production as their income increases in local currency. At the same time, the increase in production lowers crop prices, so the prices of raw materials on the world market are inversely correlated with the US dollar.
An exception is the price of sugar, which rose by 36% this year. In addition to lower fertilizer prices and a strong dollar, this is due to unfavorable weather and an aggressive bacterial disease that caused significant damage to the crop.
The forward exchange rate of orange juice is also exceptionally high, which is partly due to the decrease in supply. Unfavorable weather in America, Brazil and Mexico, as well as an aggressive bacterial disease, yellow dragon disease, had a significant impact on the crop. This significant price increase probably also affected some short sellers, who opened selling positions in these instruments without a stop.
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