- Trading orange juice has been increasingly popular around the world, with quantities continuing to rise.
- Farmers, processors, storage houses, market makers, and arbitrageurs are among the market participants who trade orange juice.
- Trading orange juice allows you to use a variety of financial products, such as futures and options.
- The fundamental asset in orange juice options trading is an FCOJ-A futures contract worth 15,000 pounds of concentrated orange juice solids.
Is it possible to trade orange juice futures?
Trading orange juice allows you to use a variety of financial products, such as futures and options. A futures contract is a legally binding agreement to buy or sell a commodity at a set price for delivery at a future date.
Where can you buy and sell orange juice futures?
The orange tree is a non-deciduous, semi-tropical tree, and the fruit is a hesperidium, a type of berry. The sweet orange, sour orange, and mandarin orange are the three principal types of oranges (or tangerine). Only sweet oranges are grown commercially in the United States. Hamlin, Jaffa, navel, Pineapple, blood orange, and Valencia are among them. Marmalade and liqueurs such as triple sec and curacao are made from sour oranges.
Oranges became the principal fruit crop in the United States after the development of Frozen Concentrated Orange Juice (FCOJ) in 1945.
Brazil is the world’s top orange juice producer, followed by Florida.
A cup of juice is produced by two to four medium-sized oranges, while advanced mechanical extractors can extract juice from 400 to 700 oranges per minute.
Orange oil is extracted from the peel prior to juice extraction.
The juice makes up around half of an orange’s weight, with the rest consisting of peel, pulp, and seeds, which are dried to make healthy bovine feed.
The marketing year for oranges in the United States begins on December 1st of the first year listed (e.g., the 2005-06 marketing year extends from December 1, 2005, to November 30, 2006).
During the U.S. hurricane season (officially June 1 to November 30) and the Florida freeze season, orange juice futures prices are vulnerable to upward increases (late-November through March).
The Intercontinental Exchange trades frozen concentrate orange juice futures and options (ICE).
The ICE orange juice futures contract is priced in cents per pound and calls for the delivery of 15,000 pounds of orange solids.
Supply – World orange production is expected to drop -10.9 percent year over year to 47.469 million metric tons in the 2019/20 marketing year. Brazil is predicted to be the world’s top producer of oranges in the 2019/20 marketing year, with 31.8 percent of global production, followed by China (15.4%), the European Union (12.3%), the United States (10.3%), and Mexico (9.3%).
Orange production in the United States increased by 36.1 percent year over year to 124.050 million boxes in 2018-19. (1 box equals 90 lbs). In 2018/19, Florida’s output increased by 59.3% year over year to 71.750 million boxes, while California’s production increased by +12.7 percent year over year to 49.800 million boxes.
The CRB Yearbook, the single most comprehensive source of commodity and futures market information available, provides information on commodities. Its sources – government reports, private industry reports, and trade and industry associations – are reliable, and its historical breadth for commodities data is unparalleled. The Barchart product range includes the CRB Yearbook. Please come to us for all your commodity data need.
How Do Orange Juice CFDs Work?
The use of a contract for difference (CFD) derivative instrument is a common approach to invest in orange juice.
Investors can speculate on the price of FCOJ using CFDs. The difference between the price of FCOJ at the time of purchase and its current price is the value of a CFD.
CFDs on FCOJ are available from a few regulated brokers throughout the world. Customers put money into the broker’s account as a margin.
How do I go about purchasing futures contracts?
A futures contract is exactly what it sounds like. It’s a financial product, also known as a derivative, that involves two parties agreeing to trade a securities or commodity at a preset price at a future date. It is a contract for a future transaction, which we simply refer to as a contract “Future prospects.” The vast majority of futures do not result in the underlying security or commodity being delivered. Most futures transactions are essentially speculative, therefore they are utilized by most traders to profit or hedge risks rather than to accept delivery of a tangible good or security.
The futures market is centralized, which means it is conducted through a physical site or exchange. The Chicago Board of Trade and the Mercantile Exchange are two examples of exchanges. Traders on futures exchange floors deal in a variety of commodities “Each futures contract has its own “pit,” which is an enclosed area designated for it. Retail investors and traders, on the other hand, can trade futures electronically through a broker.
Is it true that they exchange frozen concentrated orange juice?
NPR’s Planet Money is continually asking questions that we would never have thought to ask. They recently spoke with commodities traders to try to settle the 30-year-old issue of whether the film’s depiction of capitalist frenzy is accurate. Yes, in a nutshell.
It is possible to trade frozen concentrated orange juice. Traders do not arrive with carts brimming with small metal cans. Instead, they trade contracts stating that they will provide a particular amount of orange juice at a certain price (15,000 pounds at a time, not in small cans).
If you haven’t seen the movie in a long, or if you haven’t seen it at all, here’s a refresher plus some spoilers. (You ought to.) It’s held up better than most ’80s films, and you can watch it on Netflix or Amazon Prime. At Walmart, you can generally locate a copy in the bargain DVD bin.) The Duke brothers of Philadelphia, two wealthy jerks, plan to tamper with the lives of two individuals in order to resolve a feud. They plan the assassination of one of their employees, Dan Aykroyd’s Louis Winthorpe III. They steal his entire lifejob, expensive apartment, and alland pass it over to a particularly bright con guy they meet on the street: Eddie Murphy’s Billy Ray Valentine. Everything is taken away from the affluent trader, and he is forced to live on the streets.
Valentine recognizes the commodities dealers for what they are: extremely wealthy bookmakers. He and Winthorpe meet to discuss what transpired and plot their vengeance against the brothers. The brothers planned to profit handsomely in the frozen concentrated orange juice market by obtaining early harvest reports from the government through dubious means. The vengeance squad replaces it with a counterfeit and uses the information from the genuine report to make their own wealth and ruin the brothers.
How? The Duke brothers purchased up every ounce of orange juice they could find at any price after the phony report predicted disastrous crops, aiming to corner the market and sell it at a premium after other dealers learned of the crop failure. Prices rose as a result of other dealers following their lead. Meanwhile, Winthorpe and Valentine were selling orange juice futures at inflated prices, knowing that once the genuine crop report was released and prices fell, they’d be able to get dirt cheap orange juice elsewhere. They ruined their bosses by shorting the FCOJ.
In a movie, this is great because the rich bastards get their comeuppance, and hearing everyone say “frozen concentrated orange juice” over and over is hilarious. It’s also shocking that it’s fairly realistic. People really do trade massive quantities of frozen OJ, and people really can be financially devastated by making terrible bets on margin (credit), as the Duke brothers do in the movie, according to real traders contacted by Planet Money.
Part of the reason no one makes good Wall Street movies anymore, according to one of their experts, is that a modern version of Trading Places wouldn’t have traders jostling and yelling in the basement of the World Trade Center: instead, the action would be a bunch of guys and gals tapping away at computers, just like any other American office. Yawn.
The curious issue is that in 1983, insider trading based on ill-gotten unreleased government information was not banned in the commodities market. Sure, in the stock market, but not when it comes to commodities. That didn’t change until the Dodd-Frank Act of 2010, when the Eddie Murphy Rule was enacted.
If you haven’t already, watch the Planet Money episode, which covers a lot of ground we haven’t covered here, and view Trading Places if you haven’t already.
Are you looking for more consumer news? Consumer Reports, our parent company, has the most up-to-date information on scams, recalls, and other consumer issues.
In trading places, what does Winthrop say?
This is what it means: He wants to commit to selling orange juice for $1.42 a pound in April. The number “30” in his line denotes that he intends to begin by selling 30 contracts. (One contract is a lot of orange juice.) (Also, that “30” could be a different number.) It’s difficult to comprehend what he’s saying. But it makes no difference because they sell a lot of contracts.)
All other dealers believe the price will be higher than $1.42 in April. The traders swarm Winthorpe and Valentine, offering to buy large quantities of orange juice for $1.42 per pound.
What makes orange juice a commodity?
Orange juice is one of the few frequently traded futures contracts that is based on a tropical fruit, oranges. In the Western Hemisphere, oranges are widely grown, particularly in Florida and Brazil. Although Brazil is by far the largest producer of oranges, the United States, particularly Florida, is also a major participant.
Due to the perishability of oranges, the futures contract follows frozen concentrated orange juice (FCOJ). This form is ideal for storage and meets one of the requirements for futures trading: the underlying commodity must be deliverable. This contract can be bought and sold on the ICE. The FCOJ contract is available in two variants on the ICE: one that tracks Florida/Brazil oranges and another that is based on global production.
Orange production is extremely weather-dependent. Hurricane season, for example, which is prevalent in the Florida region, can have a big impact on orange prices, both on the spot market and in the futures market. During the hurricane-filled years of 20042005, the price of the FCOJ contract skyrocketed. When investing in FCOJ futures, keep weather and seasonality in mind.
Why is orange juice referred to as OJ?
O.J. Simpson, or O.J., is a well-known figure in the “The Juice” suffers from arthritis in his knee, and the acidity of orange juice aggravates his ailment. Simpson is allegedly a big fan of orange juice, therefore he’s willing to give it up. Of fact, the initials O.J. stand for Orenthal James, but they developed into “Orange Juice,” she says.
What exactly is Eddie Murphy’s rule?
Frank Oz, John Landis, and Jamie Lee Curtis’ sister all make cameo appearances.
“Trading Places” is jam-packed with cameos and inside Landis gags. Bo Diddley appears as a pawnbroker, Jim Belushi dresses up as a gorilla for the New Year’s Eve train party, comedy duo Franken & Davis (Al Franken and Tom Davis, fellow ‘SNL’ alums) work as baggage handlers, Kelly Curtis (Jamie Lee’s sister) plays “Muffy,” one of the girls at Winthorpe’s country club, a trenchcoat-wearing, briefcase
Frank Oz’s cameo as the police officer who checks in Winthorpe’s belongings after he is jailed is doubly noteworthy because Oz previously appeared in “Blues Brothers” as a police officer who checked Jake Blues (John Belushi) out and returned his belongings. Winthorpe’s jail number is 7474505B, which is the same as Jake Blues’ in “Blues Brothers.”
Ralph Bellamy and Don Ameche reprise their roles as the Duke brothers in “Coming to America,” which is full of in-jokes. The brothers are homeless on the streets in that film. Prince Akeem (Eddie Murphy) tosses the brothers a hefty wad of cash when he sees them in their hobo state, and Mortimer tells Randolph that it’s enough for a fresh start.
6. Don Ameche was adamant about not cursing onscreen.
Don Ameche, who played Betty Grable’s love interest twice (“Down Argentine Way” and “Moon Over Miami”), was quite old school when he returned to the part of Mortimer Duke after a 13-year break. Ameche struggled to reconcile speaking the F-word and N-word onscreen because of her conservative morals and religious convictions. Not only did he refuse to do more than one take for the final scene (in which he yells, “Fuck him!”), but Ameche went out of his way to apologize to the cast and crew every time his character used vulgar language, even showing up early to set to do so (at least according to co-star Jamie Lee Curtis, who told the story years later on “Larry King Live”). We didn’t see this hesitancy onscreen, because to Ameche’s talent, but rather a specific enjoyment when he delivered those not-so-nice words that perfectly suited the not-so-nice Mortimer. That cussing was well worth it, as the part resurrected Ameche’s career, and he went on to win an Academy Award for Best Supporting Actor for his following picture, “Cocoon,” in which he played a senior man revitalized through less-than-kosher ways (the fountain of youth meets Atlantis).
7. There’s a “Eddie Murphy Rule” (and it has nothing to do with assisting hookers)
No, it’s not about assisting beleaguered transsexual prostitutes. The “Eddie Murphy Rule” prohibits “trading in the commodity markets using pirated government information.” It took almost thirty years, but the United States government eventually made it unlawful to profit from stolen information in 2010. (Really? It was only three years ago, right? “In the movie Trading Places, starring Eddie Murphy, the Duke brothers intended to profit from trades in frozen concentrated orange juice futures contracts using an illicitly obtained and not yet public Department of Agriculture orange crop report,” said Gary Gensley, chairman of the Commodity Futures Trading Commission, on the floor of Congress. Section 746 of the Dodd-Frank Wall Street Reform and Consumer Protection Act contains Section 136 of the Wall Street Transparency and Accountability Act. We’d rather call it the “Eddie Murphy Rule” for the sake of saving time, money, and happiness, much like we’d call a bacon, lettuce, and tomato sandwich a BLT.
In trade, what are futures?
Futures are a sort of derivative contract in which the buyer and seller agree to buy or sell a specified commodity asset or security at a predetermined price at a future date. Futures contracts, or simply “futures,” are traded on futures exchanges such as the CME Group and require a futures-approved brokerage account.
A futures contract, like an options contract, involves both a buyer and a seller. When a futures contract expires, the buyer is bound to acquire and receive the underlying asset, and the seller of the futures contract is obligated to provide and deliver the underlying item, unlike options, which can become worthless upon expiration.