Fruit Loops are an American breakfast cereal by Kellogs. Similar in size and shape to the Honey Nut Loops we get here, they come in gaudy fruit colours like green and red etc.
The expression 'fruit loop' often used to refer to a crazy or idiotic person, I suppose derives from the fact that 'loopy' is a similar adjective to the above and a 'fruit loop' just emphasizes that!
And they were available here for a while in the 60s. Not very tasty though. They used a toucan as a symbol on the box and had a guide to toucan talk, which was backslang. So fruit loops were ootfray oopslay. Yes, I begin to see why...