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Orange Juice Prices Spike (KO, PEP)

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By Paul Ausick Published

Cold weather in Florida and the discovery of an unapproved fungicide in imports from Brazil have sent the price of orange juice up more than 25% in the past few days. The Coca-Cola Co. (NYSE: KO), makers of Minute Maid products, and Pepsico Inc. (NYSE: PEP), makers of Tropicana products, control about two-thirds of the US orange juice market. Neither company has commented on the recent price spike.

The US Food and Drug Administration has found trace amounts of the fungicide in Brazilian juice and expects to complete testing of the latest shipments by mid-month. Any juice tainted with the fungicide will be rejected.

Brazil is the second-largest provider of orange juice in the US, trailing only Florida, which normally supplies about three quarters of US demand. Recent cold weather in Florida puts that production in jeopardy. Combined with the problems with the Brazilian juice, the outlook for retail prices of orange juice calls for a sharp rise.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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