ICE FCOJ Review:Rallies On Charts, Underpinned By Fundamentals

ICE FCOJ Review:Rallies On Charts, Underpinned By Fundamentals

NEW YORK (Dow Jones)--ICE Futures U.S. frozen concentrated orange juice rallied on technical buying Wednesday as demand ideas and supply concerns underpinned prices.

May juice settled up 380 points at 81.05 cents a pound, off of the 81.50 high, and the July contract settled up 335 points at 83 cents.

OJ dipped in early dealings to the 77.10 session low basis May, but quickly regained balance. The contract surged through resistance at the 78- and 79-cent levels to hit 81.50, the contract's highest price point since Jan. 22. May juice trimmed gains to below the 80-cent level but reclaimed ground and settled stronger on the day.

Analysts said juice could advance to the 82-cent level, a high hit Jan. 22, and the 83-cent level on continued technical buying.

Aside from technical buying, supply and demand conditions are adding to FCOJ's appeal, analyst said. Ongoing drought conditions in the northern part of Florida have been adding to gains during the week, though the trees are blooming satisfactorily and recent rains have taken the edge off of dry conditions, said an Orlando-based FCOJ broker.

Florida's 2008-09 orange crop projection is expected to be left unchanged at 158 million boxes when the U.S. Agriculture Department issues its April crop production report at 8:30 a.m. EDT Thursday, analysts said.

Increased consumption of reconstituted orange juice in place of chilled juice beverages is adding support amid the tight economic situation, the broker said.

Added support is springing from ideas of a weaker orange crop from Brazil, the leading producer of FCOJ, ahead of the U.S., said Jimmy Tintle, analyst at Transworld Futures in Tampa. Weather premium may be trickling into the market ahead of the June-July onset of the Florida tropical storm and hurricane season, he added. These bullish factors could push orange juice futures to the $1.20-a-pound level by mid-September, Tintle said.

ICE FCOJ open interest deceased by 30 positions Tuesday to total 28,296, the exchange reported.

Volume was estimated at 7,061 contracts, according to exchange data. In options, approximately 1,057 calls and 389 puts traded.

  ICE         Settle      Change    Range (At time of settlement)  May         $0.8105     up  380   $0.7710-$0.8150  Jly         $0.8300     up  335   $0.7920-$0.8325  

-By Holly Henschen, Dow Jones Newswires; 201-938-2338;

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April 08, 2009 14:29 ET (18:29 GMT)

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