Liquidity fosters smooth price variance as buyers and sellers can execute transactions during price moves. Meanwhile, futures suffering from low volume and open interest often experience wild price swings on the up and downside. When the volume and the total number of open long and short positions in the futures market are low, bids to buy can disappear when prices drop, and offers to sell can evaporate when prices increase. FCOJ is the least liquid member of the soft commodities sector, and over the past weeks, the price exploded to a record high as supply concerns and rising production costs gripped the market. Brazil is the world’s leading orange-producing country, but Florida and California are also significant orange-producing states.
In my Q1 soft commodities report on Barchart, I highlighted that FCOJ was the best-performing member, with a 30.57% quarterly gain after rising 41.08% in 2022. The buying continued in early Q2 2023, with FCOJ rising to another record peak.
