Brazil’s Citrosuco Threatens Force Majeure on Some Orange Juice Supplies

Dayanne Sousa
Mon, July 24, 2023 


(Bloomberg) -- Brazil’s Citrosuco, one of the world’s top orange juice producers, warned it may need to declare force majeure on supplies to some clients after disease and rainfall damaged crops.

In a July 17 letter sent to clients and seen by Bloomberg, the company said it was being “severely affected” by greening disease and rain that flooded farms. It added it won’t be able to ensure supplies at the volumes and prices previously agreed.

Citrosuco confirmed the contents of the letter, which it said was sent as a warning to some clients who had contracts for delivery earlier this year. In a statement to Bloomberg on Monday, the company added the communication was part of specific commercial negotiations.

While the letter stated “supply performance is currently prevented by force majeure, until further notice,” the company said it had not taken the actual legal step associated with invoking force majeure, a clause companies usually enforce when an unforeseen event, such as a fire or natural disaster, prevents them from complying with a contract.

Citrosuco’s letter is a reminder of just how tight global orange juice markets are. Brazil ships almost four of every five cups of orange juice consumed globally, according to data by the US Department of Agriculture, and Citrosuco is part of a group of three major juice companies — including Sucocitrico Cutrale LTDA and Louis Dreyfus Co. — that is responsible for most exports from the country.

Orange juice futures reached a record high Monday, rising by the exchange limit of 10 cents early in New York trading. Greening disease, which is spread by an infected insect and causes trees to produce unusable fruit, was responsible for decimating Florida’s orange groves.

Bloomberg Businessweek

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