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FDA clears more OJ imports, but mum on Brazil

Health regulators cleared more orange juice imports from five countries after testing for the fungicide carbendazim, but made no mention of samples from top grower Brazil, which accounts for half of U.S. juice imports.
/ Source: Reuters

Health regulators cleared more orange juice imports from five countries after testing for the fungicide carbendazim, but made no mention of samples from top grower Brazil, which accounts for half of U.S. juice imports.

The Food and Drug Administration said 19 of the 45 samples it had taken since testing began on January 4 were safe , but the remainder were "pending analysis and/or are under compliance review." A spokeswoman declined to specify where those samples originated, but traders said they feared many may be from Brazil, where carbendazim is widely used.

"It's quite possible that they are from Brazil, and investors are concerned about the idea that the samples will continue to be looked at and not released," said Sterling Smith, senior market analyst at Country Hedging Inc in St. Paul, Minnesota.

New York orange juice futures surged their daily limit of 10 cents to more than $2 per pound prior to the FDA announcement, within a whisker of last week's record high. Options market prices indicated a price of nearly $2.14, Smith said, which would be a new all-time high.

The fungicide scare flared last week after the FDA announced that a company -- later identified as Coca-Cola Co. -- had reported finding carbendazim in juice samples from the South American country.

The agency said it would begin testing imports for the fungicide and would reject shipments in excess of its 10 parts per billion (ppb) detectable limit. The Environmental Protection Agency, which regulates fungicides, considers carbendazim to be a health risk at more than several thousand parts per billion.

On Friday the FDA said carbendazim discovered in 19 samples from Canada, Mexico, Honduras, Costa Rica and Belize was at acceptable levels. It said 12 of these have already been released for import. The FDA has collected a total of 45 samples of juice, juice concentrate and juice powder.

Growers in Brazil say their juice, which accounts for more than a tenth of total U.S. consumption, is almost certain to test positive since carbendazim is widely used to combat blossom blight and black spot, a mold that grows on orange trees.

Although trace amounts of the fungicide are still allowed in 31 food types including grains, nuts and some non-citrus fruits, it has been banned from U.S. citrus juice since 2009. The European Union allows imports with up to 200 ppb. It is banned in Australia.

The threat of a total halt in Brazilian juice imports fuelled a frenzy of buying in the tiny frozen concentrated orange juice futures last week, with traders saying companies will be hard-pressed to quickly find alternate supplies since Brazil accounts for about two-thirds of the world's output.

While the panic briefly subsided a week ago on hopes that the Brazilian industry might find a way to avoid a ban, prices have surged another 14 percent this week as optimism faded.

"You're not going to get the all-clear for months. That's why we have such a nervous market," said James Cordier, a senior analyst with brokerage Optionsellers.com in Florida.

Brands such as Tropicana, from PepsiCo Inc., and Coke's Minute Maid may contain a mix of juices sourced from Brazil and the United States. Tropicana says the company decided some months ago to use exclusively Florida juice in its Pure Premium brand.

So far big juice companies as well as smaller brands that promote the fact their juice is made exclusively from Florida oranges have reported few signs of consumer concerns about the fungicide, but many remain nervous about a possible backlash.

The FDA said importers will have 90 days to export or destroy any product that has been refused.