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Don't Panic, Orange Juice Won't Be Squeezed

NEW YORK (TheStreet) -- The unusually severe cold temperatures experienced by the central and eastern U.S. in recent weeks are expected to have a chilling effect on economic activity for the quarter, so much so that a noticeable slowdown in GDP growth is possible.

The largest industries to take a hit are retailers and restaurants -- when would-be diners and shoppers stay warm at home, so do their dollars.

But while the damage caused by weather-related consumer skittishness is generally reversed as soon as temperatures normalize, one industry is threatened with irrecoverable losses when the cold strikes: citrus producers.

Because many varieties of oranges and lemons are harvested in the winter months in the U.S., an unseasonably cold winter can cause devastating losses for Florida and California citrus farmers, some of which pass down to juice producers, crop insurers and consumers.

We've had two significant freezes this season: a deep December freeze in California's Central Valley, and several freezing days in southern Florida where a large portion of the country's oranges are grown.

Impact on Producers

The largest public companies most directly positioned to suffer the brunt of the bad weather are Limoneira  (LMNR) in the Central Valley and Alico (ALCO) in southern Florida.

In the case of Alico, the worst of the possible damage was likely avoided because temperatures in Florida didn't fall deep below 28 degrees (the temperature at which substantial damage to citrus plants occurs) at the peak of the night-time freeze, and didn't stay there very long. While we aren't particularly bullish on Alico in general, we don't believe the winter weather is a catalyst to sell.

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