Originally published on August 29, 2019 by TraderStef at CrushTheStreet.
UPDATE Sept 3: Hurricane Dorian reached 185mph sustained winds with gusts to 220mph, well beyond Cat 5. After stalling over and devastating portions of the Bahamas, he has lost strength as steering currents remain uncertain, but less likely to impact Florida’s orange industry. The price is still worth watching because orange juice has entered its seasonal upward price trend period.
Hurricane Dorian is gaining strength in a favorable environment out in the tropical Atlantic Ocean. The National Hurricane Center has identified Florida as the target for landfall during the Labor Day holiday, and Dorian is forecast to reach catastrophic Cat 4 intensity.
“A west-northwestward to westward motion should continue into the weekend with Dorian moving near or over the northwestern Bahamas and toward the Florida peninsula. The (models) guidance envelope has nudged southward this cycle, with the ECMWF and HMON along the southern side, and the GFS bracketing the northern side… Dorian will be moving through a favorable environment of low vertical wind shear and warm sea surface temperatures. This should allow for at least steady intensification, and Dorian is forecast to become major hurricane on Friday. Dorian is predicted to remain a dangerous hurricane throughout the remainder of the forecast period. The NHC intensity forecast is again near the upper end of the guidance.”
Florida Orange Farmers Face New Blow With Dorian at the Doorstep… “Hurricane Dorian may batter at least a quarter of Florida’s main orange growing areas just when Florida citrus farmers thought they’d have a good season. The storm is threatening to deliver torrential rain and 130 mile (210 kilometers) per-hour winds over the Labor Day holiday to Florida at a time when citrus growers are still recovering from Hurricane Irma. Two years ago, that storm helped drop the number of oranges produced by the state to its lowest levels since 1945, causing billions of dollars in losses.” – Bloomberg, Aug. 29
- How To Invest In Orange Juice… “Why is orange juice valuable, how is it grown, and how is the juice produced.” – Commodity.com
Orange Juice Futures seasonality pattern:
Orange Juice futures monthly chart as of Aug. 29, 2019 close…
Technical analysis on the chart is straightforward without a need for many indicators. The orange juice futures dance to a specific seasonality cycle vs. other commodities, with its low in price typically printing during late summer and highs around the Christmas holiday season. If Dorian makes landfall on the Florida peninsula where orange crops are plentiful, it will coincide with the low in this cycle and the upward price trend will amplify if substantial crop damage occurs. The DMI-ADX may look negative, but it is actually indecisive because the price is pivoting off seasonal lows. The StochRSI is setting up for a break to the upside after bouncing along in an oversold condition since last fall. The daily chart will provide some insight into the near-term price action potential.
Orange Juice futures daily chart as of Aug. 29, 2019 close…
The price on the daily has taken out the overhead 50 Exponential Moving Average (EMA) and the 2018 trendline drawn down from the high of $172 last July. The DMI-ADX is setting up with a bullish Alligator Tongue, and the StochRSI is stoked. The price closed at $108 today and a rally in the near-term to the 23.6% Fibonacci at $123 is likely with only the threat of Dorian on Florida’s doorstep. Note the remaining Fibonacci retrace levels on the monthly chart for a complete list of upside price levels to watch.
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