Orange Juice ICE Futures Contract
The ICE (Intercontinental Exchange) Orange Juice futures contract, tracks the movement of frozen concentrated orange juice that is delivered to a regulated Intercontinental Exchange delivery points, in Florida, New Jersey, and Delaware.
Frozen concentrated orange juice is physically delivered which means if you are long the contract into the delivery period you are obligated to accept delivery of 15,000 pound of frozen concentrated orange juice per contract. You can find the delivery points which are listed on the Intercontinental Exchange’s web site here. The grade needs to be liquid and no more than 3% solid, and US Grade A with a Brix value of not less than 62.5 degrees. The ICE frozen concentrated orange juice futures contract is the liquid and widely traded orange juice contract and is widely seen as a global benchmark.
The ICE Frozen Orange Juice futures contract trades in cents and hundredths of a cent to two decimal places. The minimum price increment is 5/100 of a cent per pound which equals $7.50 per contract. The contracts that are traded expire in January, March, May, July, September, November. The grade that needs to be delivered is US Grade A with a Brix value of not less than 62.5 degrees. Orange juice that is accepted for deliver in an ICE regulated warehouse needs to come from U.S., Brazil, Costa Rica and Mexico. The last trading day of each contract occurs on the 14th business day prior to the last business day of the month.
Trading Hours are:
|NEW YORK||8:00 AM – 2:00 PM (08:00 – 14:00)||8:00 PM (20:00)|
|LONDON||1:00 PM – 7:00 PM (13:00 – 19:00)||1:00 AM (01:00)|
|SINGAPORE||8:00 PM – 2:00 AM (20:00 – 02:00)||8:00 AM (08:00)|
How to Trade
Frozen concentrated orange juice that is traded on the ICE exchange and fluctuates with supply and demand. The supply is subject to many factors, including the weather and diseases, which are carefully watched by traders throughout the year, similar to other produce crops like sugar and wheat. Most of the oranges that produce juice are harvested during the winter between November and February. This leaves these fruits subject to supply shocks especially during the hurricane season.
Hurricanes often touch down in Florida, but rarely move through the center of the state which was the case with Hurricane Irma which destroyed the orange crop in Florida in 2017. When the supply of oranges is diminish, supply is disrupted sending prices of frozen concentrated orange juice higher. Disease is also a factor that can effect supply.
The demand for orange juice has steadily declined in the United States over the past decade. The decline has come as health conscious consumers look for other sources of beverages that have less sugar. While orange juice is natural, it contains high levels of fructose, which can be difficult for a body to break down.
Orange juice futures contracts are used by speculators as well as commercials. Many orange juice distributors will lock in future prices, looking to deliver their oranges into the short futures contract. For example, if you plan on producing 150,000 pounds of frozen concentrated orange juice and new you would deliver it in March, you could sell 10 March FCOJ ICE contracts, and deliver the orange juice to an ICE regulated warehouse.
The frozen concentrated orange juice contract is derivative that his used by commercials to lock in future prices as well as a speculative devise used by traders, to bet on future prices. Without the combination of commercials and traders, the liquidity in the FCOJ futures contract would decline.