NY juice jumps as fungicide found in Brazil juice

NEW YORK (Reuters) - Orange juice futures rose almost 3 percent on Friday after the U.S. Food and Drug Administration said juice shipments from Brazil and Canada had tested positive for a fungicide that is prohibited in the United States.

Such a finding in Brazil juice has traders worried FDA may ban imports from there. Brazil supplies about 10 percent of U.S. orange juice.

The key March frozen concentrated orange juice contract climbed 7.00 cents, up by 3.3 percent, to trade at $2.136 per lb at 12:05 p.m. EST (1705 GMT), just under the session top of $2.1365.

The FDA said 11 samples of imported orange juice had tested positive for the fungicide carbendazim. Five of the samples were from Brazil and six from Canada.

"People had to figure it out," said The Price Group analyst Jack Scoville. "We are looking at lower supplies available (for the U.S. market)."

Juice traders noted though that the volume traded with only 90 minutes left before the session ended at 1:30 p.m. (1830 GMT) stood at a little over 1,200 lots, almost two-thirds below the 30-day average, Thomson Reuters data showed.

In front March, nearly 600 of the 850 lots traded were done before the FDA results were released.

"You have to wonder if somebody was just short and just wanted to jam it up there. The market had also corrected this week and we're just regaining the ground lost in that correction," a dealer said.

Traders said the FDA verdict also left unsaid what will happen next to juice imports from Brazil, the world's top citrus producer and accounts for 10 percent of all U.S. supplies.

"The question is what they are going to do going forward," said Country Hedging Inc analyst Sterling Smith. "They've left us hanging."

Fears of a potential ban by U.S. health regulators of Brazilian juice products using the fungicide had powered a recent rally that sent orange juice futures to record territory.

Brazilian juice is used by leading U.S. producers such as Pepsico's Tropicana and Coca Cola's Minute Maid in a blend with oranges from Florida.

(Reporting by Rene Pastor; Editing by Dale Hudson and Bob Burgdorfer)