The first quarter’s surprise outperformer was a farm commodity

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Orange juice futures were a surprise outperformer in the first quarter this year, as the coronavirus pandemic — and perhaps a misguided desire for vitamin C — helped to drive a surge in demand for the drink.

During the first three months of the year, orange juice futures for May delivery gained 20.5% to be priced at $1.20 a pound. In March alone, the futures were up more than 25%.

A futures contract is an agreement to buy or sell an asset — in this case, orange juice — for a set price at a particular point in the future. It indicates what people expect the future price of orange juice to be.

This upward spike in prices came as global stock markets and other assets tumbled amid panic around the coronavirus crisis.

The Dow Jones Industrial Average and S&P 500 were both down by around 20% over the quarter, while European stocks posted their worst quarter since 2002Crude oil also plummeted over the period, losing more than 65% of its value, as the pandemic weighed and oil exporters Saudi Arabia and Russia engaged in a price war.

Alongside orange juice futures, wheat futures were one of the only other agricultural commodities to see a price increase between January and March, gaining 1.8%. Cocoasugar and coffee futures all tumbled.

Speaking to CNBC in a phone call on Wednesday, Francois Sonneville, senior analyst for beverages at Rabobank’s research arm, said demand for orange juice had been lifted because of the coronavirus outbreak.

“When people get flu, they drink more orange juice because of the vitamin C, and although it’s not confirmed that this will really help against the coronavirus, it does boost your immune system. So demand has been relatively strong,” he said.

He added that people would be less likely to skip breakfast if they were placed under lockdown or were socially distancing at home – and orange juice was often found on breakfast tables.

Simultaneously, prices were also being driven upwards by supply issues, Sonneville added. In Brazil, the world’s biggest orange juice exporter, bad weather meant farmers were already expecting a poor harvest for 2020/2021.

“In this unprecedented time, we also see a bigger risk of supply chain disruptions, and that means people start to think this orange juice might not come from Brazil to other places in the world,” Sonneville told CNBC. “That’s another risk factor and therefore the price should be rising.”

Before the coronavirus crisis, orange juice futures had fallen to “really low levels,” Sonneville noted, as demand slipped. Prior to the ongoing pandemic, Rabobank had predicted that demand would continue to decline into 2021.

“Whether we would fall back very quickly to below a dollar after the crisis, I don’t think so, given the problems there are with the 2020/2021 harvest,” he said. “But whether we would go up to $1.50, I wouldn’t dare to say.”

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