For orange juice, the squeeze is on

Amid news of the extent of the devastation - as much as 70 percent of California's crop could be lost.

MarketWatch: In-depth global business coverage A deep freeze that has damaged California's orange crop will certainly mean higher prices for peel-and-eat varieties, but it's just the latest jolt to an orange-juice market that was facing bitter supply problems already. Driven by three consecutive years of poor harvests in Florida, juice prices have been sky-high and the Golden State cold snap has, so far at least, not made much difference as measured by commodities trading. Amid news of the extent of the devastation - as much as 70 percent of California's crop could be lost - March frozen concentrated orange-juice futures actually fell Tuesday by 0.3%, to close at $2.0045 a pound at the New York Board of Trade. A year ago, the March contract was running around $1.25 a pound. Two top sellers, Tropicana and Minute Maid, have been struggling with Florida's higher prices. "I would have thought orange juice would rally as well given the cold temps in California," said Darin Newsom, an analyst at DTN. "However, it wasn't Florida. Also, futures are already near all-time highs." Two of the largest sellers of orange juice - PepsiCo's Tropicana and Coca-Cola Co.'s Minute Maid - have already been forced to raise prices as the result of the shortfalls in Florida, brought on by a series of hurricanes and their aftermaths stretching back to 2004. Other players in the orange juice and orange juice-drink category include Kraft Foods, owner of VeryFine; Sunny Delight, sold off by Procter & Gamble in 2004; and Florida's Natural, a grower's cooperative. "We have had to take four price increases over the last year due to the higher cost of citrus and other inflationary pressures," said Ray Crockett, spokesman for Minute Maid. And if that may make some customers and retailers unhappy, it hasn't really hurt sales so far, Crockett added. "Our sales have been relatively flat." As for any fallout from the California crop damage, he said the company is "obviously monitoring the situation" and will decide what to do "when it becomes clearer." Industrywide, for the 12-month period that ended September 30, retail revenues from orange juice were down 0.3%, according to the Florida Department of Citrus, citing AC Nielsen data. Meanwhile, average prices were up more than 6% and gallon sales were down 6.2%. "We have had three consecutive years of the Florida crop being smaller," said Tom Spreen, chairman of the Department of Food and Resource Economics at the University of Florida. "Prices have just really shot up rather dramatically. The price the processing plant pays the grower has tripled since before the hurricanes of 2004." Since California's focus is on fresh fruit - or oranges folks buy to squeeze at home - the freeze "doesn't have that much effect on the processing side," Spreen said, adding that the demand for fresh oranges has been on the decline for some time anyway. Spreen doesn't see any immediate relief to the Sunshine State's supply problems, either, as this year's crop is "turning out to be even smaller it was expected to be," and one long-time back-up source essentially isn't operating. Brazil used to export huge amounts of orange juice to the US but Florida growers sued for - and won - an anti-dumping order, which has had a chilling effect on imports. Since then, Brazil has turned to European markets to sell its crop, Spreen said: "So it is not like there is this big supply of orange juice in Brazil ready to ship here." MarketWatch: In-depth global business coverage