Case Study : Orange Juice Crisis Essay
Due to the speculation of decreased orange juice supply, orange juice futures jumped 1.5% for January 2016, according to the New York based global commodity trading organization Intercontinental Exchange® (ICE®) (Perez, 2015).
The basis for this claim is the proliferation of a century-old disease that is expected to devastate the worlds’ orange juice supply in the coming years (Perez, 2015). The disease, known as Huanglongbing (HLB), or “citrus greening,” is caused by the Asian citrus psyllid insect. The insect spreads the disease as it moves from tree to tree, eating the branches and leaves. Once the disease manifests itself in the tree, it molests the unripe fruit, resulting in misshapen and acrid fruit that falls prematurely from the tree. Unfortunately, since the late 19th century, the disease has swept through Asia, Brazil, and the Arabian Peninsula. More recently, it has spread to the southernmost United States (U.S.), including from California, Florida, and most states in between. At the present time there are no known methods useful in eliminating the insects or the disease, therefore allowing the disease to wipe out entire citrus crops (Citrus Greening).
Consequently, ICE® implies that supply and demand of orange juice will be effected and retail prices for orange juice will continue to climb until orange juice crops are restored and back in full production (Perez, 2015).