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Chart of the week: orange juice goes out of fashion

Production is set to fall by a quarter and inventories are at a six-year low. That sounds like a recipe for higher prices for orange juice. But demand is declining.

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Production is set to fall by a quarter andinventories are at a six-year low. Thatsounds like a recipe for higher prices,say Emiko Terazono and Neil Hume inthe FT. But orange juice future priceshave stayed stuck in a narrow rangebetween $1.10 and $1.60 a pound.

The problem is a long-term decline indemand. Global consumption, led bythe US and the EU, has dwindled by overa fifth in ten years. The key issue is ashift away from sugary drinks as healthconsciousness has spread, while therange of soft drinks on the market hasexpanded; smoothies, vegetable blends,and coconut water are all nibbling awayat the orange juice market. In emergingmarkets, meanwhile, it remains arelatively expensive drink, which hasput consumers off.

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