The Food and Drug Administration said carbendazim would remain illegal for citrus in any amount in the United States. Brazil and U.S. industry groups asked the FDA to reconsider its stance on the fungicide, widely used in Brazil to combat blight blossom and black spot, a type of mold that grows on orange trees.
Orange juice futures jumped almost 3 percent on Friday after the FDA announcement.
Traders also fretted that the fungicide testing would further dent demand if it translated into higher prices for consumers, or sparked fears of a health risk.
Brazilian orange juice makes up about half of all U.S. imports, and meets more than a tenth of domestic demand.
The U.S. Juice Products Association and Brazil's CitrusBR urged the FDA to raise the amount of the fungicide, carbendazim, it will allow into the country by raising the legal limit for frozen concentrated juice.
"If this were considered, the whole problem would have been already resolved," CitrusBR's Christian Lohbauer told reporters on Friday.
These were the first public efforts by the two countries' industries to persuade the FDA to restore juice imports into the United States since testing began almost a month ago.
FROZEN JUICE EXCEPTION
The industry groups called on the FDA to differentiate between ready-to-drink juice and frozen concentrate.
Since the concentrate is diluted before drinking, the level could be close to 60 parts per billion (ppb) without exceeding the FDA's legal limit for drinkable juice, industry groups said.
The FDA said any imports with detectable levels of fungicide, which means above 10 ppb, would not be allowed in the country.
The European Union allows 200 ppb, and the FDA has said any level of fungicide below 80 ppb poses no health risk. The agency did not recall any juice already on store shelves in the United States.
Ready-to-drink juice, which makes up about 65 percent of Brazil's juice shipments to the United States, does not seem to have a problem with traces of the fungicide.
Only frozen juice spikes above the limit because it is in concentrate form and would be diluted for drinking, Lohbauer said.
"The agency is using this lower maximum level ... because the letter of the law requires the agency to do so," the U.S. Juice Products Association said in a statement, and said a higher tolerance level would be the logical choice to protect consumers.
But the FDA did not budge on its testing policies.
"We've stated before that we would test imports on an 'as is' basis, and that's still our policy," FDA spokeswoman Siobhan DeLancey said in an email.
Brazil juice imports will continue to falter unless the FDA raises its tolerance level for fungicide, or Brazilian growers find an alternative way to keep trees free from mold, growers said. However, U.S. consumers still have plenty of juice to drink for now because of a large crop this season, analysts said.
The Brazilian juice industry said it would study alternatives if the United States continues to reject its juice shipments.
The industry's pressure on the FDA came after the agency announced on Friday that it had blocked three shipments of Brazilian orange juice and six from Canada that tested positive for carbendazim.
Canada, which makes up less than 1 percent of U.S. imports, does not grow its own oranges, and traders assumed the Canadian juice was grown in Brazil. The South American country often ships juice to Toronto, to get it to consumers in Chicago.
Of the six shipments detained from Canada, none had levels of fungicide higher than 31 ppb, and most were below 20 ppb. The Brazilian shipments that tested positive had carbendazim levels between 20 ppb and 52 ppb.
Two other Brazilian concentrate shipments tested positive for the fungicide, but the companies decided not to import the juice into the country, the FDA said.
The FDA said 29 of the 80 orange juice samples it had taken since testing began on January 4 had no traces of carbendazim, including two from Brazil and seven from Canada. Importers will have 90 days to export or destroy the product, the agency said.
The FDA said it would test all shipments twice, and detain any that tested positive for carbendazim at least once.
In the United States, trace amounts of the fungicide are still allowed in 31 food types including grains, nuts and some non-citrus fruits. The fungicide had been allowed for citrus until 2009 as a temporary measure, regulators said.