The state of Texas was rocked by Category 5 hurricane Harvey just a week ago. Now it’s Florida’s turn with Irma on its way. Currently, Hurricane Irma has been classified as a Category 5 hurricane. However, the met department is predicting that it may even go up to a Category 6 storm. Irma is being touted as the worst ever storm recorded in the Atlantic north of the Caribbean and the Gulf of Mexico. Wind speeds are already crossing 185mph and are expected to strengthen further.
Irma made landfall in Bermuda on early Wednesday morning, leaving devastation in its wake. Now, the hurricane is heading towards the US Virgin Islands and Puerto Rico, and is expected to hit Florida’s Key West area. Residents and business owners in this area are on mandatory evacuation as of 7 am EST on Wednesday.
While it is not confirmed that Hurricane Irma will pass through Florida, just the fact that there is a strong possibility that it could has sent the Frozen Concentrated Orange Juice Futures soaring. On the ICE Futures US Exchange, the November frozen concentrated orange juice futures (OJX7) went up by 8.4 cents, a 6.2% increase, to reach $1.449 per pound. That is the highest that an active futures contract has gone since May this year.
The US is the second largest grower of Oranges in the world after Brazil. And Florida accounts for more than 70% of the fruit production in the country. Oranges account for more than 50% of the citrus fruit production in the world. And of all the oranges grown across the world, only 20% of the fruit is consumed as a whole fruit. 80% of the fruit is processed into orange juice and orange juice concentrate. In the US, 90% of the orange crop goes into orange juice and orange juice concentrates.
According to the US Department of Agriculture (USDA), 9% of the world’s orange crop was forecast to be produced in the US, and, more importantly, 16% of the world’s orange juice was to come from the US orange growers.
Right now, it is almost time for the orange harvest. The fruit are about golf-ball sized and any strong winds would knock them off the trees, which would mean that the season’s harvest would be almost completely destroyed.
It is not just the fruit that is in danger. The orange industry a critical part of the Florida (and US) economy. According to the Florida Department of Citrus, the industry provides jobs to more than 45,000 people and contributes $8.6 billion to the state’s economy.
The threat of Hurricane Irma comes at a bad time for the citrus industry in Florida, which was already reeling from an attack of the “citrus greening” disease. This disease is said to be carried by an aphid-like insect called the Asian citrus psyllid. The trees, once infected, show spotted and blotchy leaves, the fruit is misshapen and unripe and tastes bitter. Currently there is no cure for this disease, and the fruit tree usually dies in 3 to 5 years after it is infected. The only thing that can be done is to destroy the tree.
The Florida citrus industry, which consists of oranges, lemons, grapefruit and tangerines, has been severely impacted by the disease, with losses to the tune of $4 billion already.
While the state grapples with finding a solution to the citrus greening disease, with more areas being put under quarantine to try and prevent the spread of the disease, the impact from Irma could cripple the industry.