Cost of orange juice may be driven up as outbreak increases demand

Orange juice, that staple of so many British breakfast tables, will cost more to buy and become harder to find in the months ahead because of the ongoing novel coronavirus outbreak.

The drink is being hit by the double whammy of increased demand resulting from people seeking healthier options, and by difficulty in sourcing it from countries, such as Spain, where it is produced.

The BBC reports that the price of orange juice on the futures market has already risen by more than 20 percent. The market facilitates the long-term trading of products that have not yet been produced and the spike in that long-term price indicates orange juice will be among the products that will cost a lot more this time next year.

Stephen Innes, chief global market strategist at broker Axi－Corp, told the broadcaster orange juice has been impacted, in part, because of the belief among some consumers that it can help them battle the virus.

"The COVID-19 outbreaks are hitting both the supply and demand for orange juice," he said. "The immune-boosting properties are the demand-side attraction, while there are simply not enough tanker spaces, with airlines not flying, to bring the product to markets."

He said there is also a shortage of workers to harvest and process oranges because of illness and social distancing rules.

Jack Scoville, from the United States trading company Price Futures Group, told the BBC: "Traders are wondering if workers are around to man the plants here in Florida and in Brazil."

Other products are seeing similar price rises.

Reuters reports that the global panic buying of household staples such as toilet paper and cleaning products, and fears that governments may end up restricting the flow of other products destined for export to ensure their own populations have enough supply, have combined to drive up prices.

Phin Ziebell, an agribusiness economist at National Australia Bank, told the agency: "People are starting to get worried. If major exporters start keeping grains at home, it will have the buyers really worried. It is panicking and not rational, as fundamentally the world is well supplied with food."

Some exporters have already started to restrict flow. Vietnam, one of the world's largest rice exporters, has taken such action, as has Kazakhstan, one of the world's major wheat producers. Russia is understood to be considering reducing vegetable oil exports, and palm oil coming out of Malaysia has dwindled.

An unnamed senior Singapore-based trader at one of world's top rice companies told Reuters: "It is a logistics issue. Vietnam has stopped exports, India is in a lockdown, and Thailand could declare similar measures."

But he said prices should ultimately return to normal because, at the end of the day, "the world has enough supplies".