Orange juice futures surge on fears the U.S. government could ban Brazilian oranges.
NEW YORK (CNNMoney) -- Orange juice futures surged Tuesday amid fears the U.S. government could ban Brazilian orange juice after low levels of fungicide were detected by a juice company.
March orange juice futures jumped 9.6%, or 20 cents, to $2.0775 a pound on the ICE Futures Exchange, which traders said was the highest level since 1977.
The FDA said it learned late last month that an unspecified juice company had found low levels of fungicide in its own products, as well as orange juice and concentrate made by competitors, according to a letter dated Jan. 9.
The letter said "industry reports" suggested that the fungicide was present in orange juice made from the 2011 crop from Brazil, the world's largest orange producer.
The United States imports about 25% of oranges used in U.S. orange juice, said Tod McElhaney, president of LaSalle Futures Group. Although the U.S. doesn't import any oranges from Brazil, it does import orange juice and orange juice concentrate. (See correction)
The FDA said juice producers reported levels of fungicide in the "low parts per billion range." At that level, the fungicide does not raise safety concerns, according to a preliminary risk assessment from the Environmental Protection Agency.
The fungicide, called carbendazim, is legal in Brazil and other parts of the world. But it is not approved by the EPA and is considered an "unlawful pesticide chemical residue" in orange juice under U.S. law, the FDA said.
The FDA does not currently intend to remove orange juice containing the fungicide from the domestic market. But the agency is conducting its own testing and will "take the necessary action to ensure that the product is removed from the market" if a public health risk is found.
The agency is also sampling all imports of orange juice "and will deny entry to shipments that test positive for carbendazim."
Traders said orange juice futures could go even higher if the government moves to block imports from Brazil. But futures could also fall sharply if a Brazilian orange embargo does not materialize.
James Cordier, president of Florida-based Liberty Trading Group, said consumers could see "a little bump" in retail orange juice prices as a result of Tuesday's surge. But he said the FDA will need at least a few days to determine how widespread the problem is.
"We'll know in the next 42 to 78 hours whether this is an isolated incident," said Cordier. "We certainly can't do without Brazilian juice."
Correction: An earlier version of this article incorrectly referred to a potential U.S. ban on oranges from Brazil. In fact, at issue were imports of orange juice and orange juice concentrate.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.98%||3.95%|
|15 yr fixed||3.05%||3.05%|
|30 yr refi||4.05%||4.03%|
|15 yr refi||3.12%||3.11%|
Today's featured rates: