OJ’s record-shattering rally in May seems crazy to some. But thanks to Elliott waves, you can see the patterned logic of the liftoff
“Crisis.” “Crazy.” “Through the roof.” – These are a few of the phrases used to describe the recent performance of orange juice. In case you have a citrus allergy, here’s the skinny: Orange juice prices soared in May to tap their highest level ever on May 28.
The rising cost has put a very bitter taste in the mouths of farmers, consumers, and investors alike, as the cost of orange juice surpasses that of “olive oil” (April 8 CCN). The entire country of Japan is suspending the purchase and sale of major OJ brands like Tropicana. (May 31 Asahi[VP1] Shimbun: “Orange juice getting squeezed out in Japan due to poor harvest.”)
While U.S. manufacturers water down OJ concentrates to cut costs, and others try their darndest to put a sweet spin on “the other breakfast beverage staples” like… Anyone for a nice, fresh-squeezed glass of… pear juice?
Observes The Guardian, May 30: “Orange juice makers consider using other fruits after OJ prices go bananas.”
Enter the million-dollar question: What’s causing OJ prices to go parabolic?
Let’s peel back the “fundamental” rind. According to mainstream experts, the answer is an abysmally low harvest amidst crop diseases and severe weather conditions. From the May 28 Financial Times:
“This is a crisis,” Kees Cools, the president of the International Fruit and Vegetable Juice Association (IFU) told the Financial Times. “We’ve never seen anything like it, even during the big freezes and big hurricanes.
“The Florida industry has all but disappeared, and Brazilian groves are plagued by disease, rising costs, and unfavourable growing conditions, leaving global orange juice supplies at their lowest point in decades.”
Here’s the thing: The OJ supply crisis is nothing new. It’s been steadily underway since Hurricane Ian ravaged the orange grove epicenter of Florida in September 2022, devasting an estimated $675 million in crops.
Yet, between November 2023 to late January 2024, OJ prices endured a significant downturn from $4.25 to $2.90, a 6-month low. From there, prices rose into first week of February, only to struggle sideways in the $3.90-$3.50 range before shooting upwards again in early May.
Which opens the door to Option 2: OJ’s May ascent was fueled by something else. The supply deficit stayed the same. But crowd psychology, which unfolds in Elliott wave patterns, changed.
On May 1, our Commodity Junctures showed this labeled price chart of OJ. There, we identified the Elliott wave pattern underway as a series of ones and twos. This meant, the next move of consequence would be a third wave, the most powerful phase of an Elliott wave impulse.
On May 2, OJ prices rallied hard, and Commodity Junctures confirmed the third wave rally was underway:
The early surge aligns with expectations, given OJ’s position within the Elliott Wave progression. Multiple counts call for a third wave, if not a third of third wave, advance. Having patiently waited through the series of potential first and second waves, we want to ride the advance as long as possible, until there is evidence that it is complete.
And from there, OJ prices went “bananas,” rocketing to lifetime highs on May 28, as shown in our May 31 Commodity Junctures.
What’s next?
Well, according to the current Commodity Junctures there are two possible scenarios underway: Either OJ brushes off the limit, down days of late and rallies to new highs above $500.
Or – the progress to the upside is complete for now, and it’s time for bulls to lock in profits.
Commodity Junctures reveals exactly what we need to see to determine which scenario is at play.
Drink in the Commodity Opportunities
When it comes to knowing the future of commodity prices, there’s no such thing as a silver bullet. Even the most jarring Black Swan events like that of the pandemic can’t accurately determine where prices will go.
The only confident measure of a market’s trend is investor psychology, which unfolds as Elliott wave patterns directly on price charts. Right now, our Commodity Junctures presents high-confident outlooks for the world’s leading names in livestock, grains, softs, foods, and more.
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