The cause of the anticipated price hike for OJ, as CNN Money, the Wall Street Journal, and others have reported, is what the FDA has described as “low levels” of a fungicide called carbendazim found in the 2011 orange crop imported from Brazil. Brazil, by the way, is the world’s largest producer of oranges.
The fungicide discovery pushed the price of frozen orange juice concentrate futures to rise 26% over a six-day period—to levels not seen in a quarter of a century. The WSJ explains how high prices for orange juice futures could eventually affect how much a carton of OJ will cost at the grocery store:
If prices remain at these elevated levels, it soon could be reflected in prices on supermarket shelves, analysts said, potentially crimping already flagging demand for the beverage.
Carbendazim is used to control mold in oranges and fruits and crops. High levels of the fungicide can cause cancer, which is why it is banned for use on food products in the U.S. Carbendazim is legal in Brazil and other countries, though, and apparently some of the substance was used on fruit exported to the U.S. An unnamed juice company detected what the EPA categorizes as “unlawful pesticide chemical residue,” and even though the level of carbendazim found wasn’t high enough to be harmful to humans, the mere presence of it was enough to cause a minor panic.
Further testing on imported juice by the FDA will be completed by mid-January. If the tests show widespread presence of any potentially dangerous substances, look for the price of orange juice futures to spike again—and look to prices on supermarket shelves to do the same shortly thereafter.