KANSAS CITY (Dow Jones)–A bullish Florida orange crop estimate grabbed orange juice traders’ attention Friday morning, and they responded by rallying futures prices to six-week highs.

November frozen concentrated orange juice traded on ICE Futures U.S. surged to highs not seen since Aug. 24, on news that the U.S. Agriculture Department pegged the state’s 2009-10 orange crop at 136 million boxes, a 16% decline from last year’s 162.4 million and lower than even the most bullish pre-report estimates.

Each box of oranges weighs 90 pounds.

Analysts had thought that the projection, the first of the new crop cycle, would range somewhere between 140 million all the way up to 165 million boxes.

“This was certainly a bullish surprise,” said James Cordier, analyst and founder of Optionsellers.com.

“We haven’t seen a number like that in awhile,” he added.

The USDA cited adverse weather in early 2009 for the significantly lower crop projection.

“Weather conditions in Florida’s citrus growing regions during early 2009 were characterized by a series of cold fronts, freezing temperatures and below-average rainfall. The drought conditions continued into May, resulting in a 19% decrease in average fruit per tree from last season,” the USDA said in its October crop production report released Friday morning.

In August, citrus consultant Elizabeth Steger estimated the new crop at 154 million boxes, while processing giant Louis Dreyfus pegged the crop at 141 million, basically setting the range of expectations for the market.

The lower production combined with signs of improving retail sales have analysts taking a second look at the orange juice market, one that has been hurt in recent weeks by a lack of bullish fundamental news and ideas the new crop could have been larger than expected.

“This changes the dynamic of the market completely,” said Jack Scoville, analyst and vice president at Price Futures Group.

The FCOJ estimated the average Florida orange juice yield at 1.63 gallons per box, down 2% from last season.

The USDA pegged the U.S. all orange forecast at 8.25 million metric tons, down 10% from the 2008-09 crop.

California, the nation’s second largest orange grower, is expected to produce 55 million boxes in 2009-10, the USDA said. Most of California’s crop is grown for fresh peel-and-eat fruit, as opposed to Florida’s – which goes mostly into juice production.

In the last five years, Florida orange production has been hurt by destructive hurricanes, urban development and disease. Producers have had to destroy millions of trees because of citrus canker and citrus greening disease, putting downward pressure on total output.

November FCOJ futures shot to a six-week top of $1.0860 on the news, mostly on speculative fund buying, but has since backed down slightly as traders took profits. Bullish traders may now target the Aug. 12 high of $1.1475 a pound on ideas the crop could shrink even further if sub-freezing temperatures make their way into south Florida this winter.

“If you want to trade something from the long side, orange juice just gave you a reason,” said Scoville.

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