Short term
Trade view / 02 September 2016 at 1:07 GMT

OJ lifted by the arrival of Hurricane Hermine

Managing Partner / Spotlight Group
United Kingdom


“...Hermine strengthens into hurricane, barrels toward Florida coast...” 
so ran the headlines on Reuters at 2256 GMT on September 1 2016.

Winds from the strengthening storm rose to “Hurricane” level 1 on the five level Saffir-Simpson Hurricane Wind Scale. While that is the lightest level of hurricane it is still classified as very dangerous winds which will produce some damage:

"Well-constructed frame homes could have damage to roof, shingles, vinyl siding and gutters. Large branches of trees will snap and shallowly rooted trees may be toppled. Extensive damage to power lines and poles likely will result in power outages that could last a few to several days....”

Hermine was lashing into Florida's northern Gulf Coast late on Thursday and so was driving residents to a number of coastal areas to stock up on provisions ahead of what the state's governor warned would be a lethal storm.

Hermine is the fourth hurricane of the 2016 season, however, it is expected to be the first to make landfall (probably on Friday morning) in the state in over a decade.

It is also at risk of imposing travel disruptions over the US Labor Day weekend for other states along the northern Atlantic Coast.

OJ rises

Orange juice futures rose to a five-week high as Hurricane Hermine headed toward Florida, and so threatened to damage the centre of the US citrus industry.

It will bring precipitation of up to 10 inches (25 centimetres) of rain on northwest areas, the National Hurricane Center said Thursday. 

The majority of the citrus groves do appear to be south of the anticipated path of Hermine and to some extent the sharp rise in orange juice prices today is as a result of fear of the unknown degree of damage that the hurricane will bring.

Source: National Oceanic and Atmospheric Administration

Source:, Spotlight Ideas

Technicals suggest that in the immediate future the market is seen as overbought, having priced in fear of the unknown, an upside move that may well prove to be overdone.

The middle ground is neutral, however, longer time horizons out one month are priced as a “strong buy”.

This is a market that is going to react to overnight developments so I believe the right strategy is to acknowledge that the price action either side of the closing price...which I am treating as a pivot ie US Cents 191.60/lb and act accordingly.

Resistance is at 221.40, 208.20, 201.68, 198.17,195.15,191.88

Pivot at the close on September 1 2016 was at 191.60

185.21, 184.51, 181.95, 179.69, 175.43, 174.88, 171.92

Orange Juice 5-year chart
Source: Spotlight Ideas 

Management and risk


Orange Juice November 2016 (OJX6) US Cents/lb

[A] On a Friday rally

Entry: Buy a break of 193.00
Targets: 195.15, 198.17, 201.68, 208.20
Stop: 189.00
Time horizon: Short-term

[B] On a Friday retreat

Entry: Sell a break of 189.00
Targets: 185.21,181.95, 175.43, 174.88
Stop: 193.00
Time horizon: Short-term

— Edited by Adam Courtenay

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