Any commodities trader worth their name will have their eyes glued to The Weather Channel when June comes, marking the official start of the hurricane season.
A piece in the Financial Times today discusses how commodity prices have surged this week as the US National Oceanic and Atmospheric Administration (NOAA) warned of a strong 2010 hurricane season. Oil and natural gas prices have jumped since yesterday, along with orange juice, which will soar even higher should Florida get hit by a major storm this year.
FT: Hurricanes wield significant influence in commodity markets, triggering wild price moves. Katrina and Rita forced shutdowns of natural gas and oil production and refinery activity along the Gulf coast, sending energy prices sharply higher. Charley, Frances and Jeanne in 2004 and Wilma in 2005 inflicted lasting damage to Florida’s citrus industry, helping push orange juice futures to a record high.
David Streit, meteorologist with Commodity Weather Group, said: “Any time you have an active season, it’s going to make for active markets.”
Check out the chart below. We’ve circled temporary spikes in the price of OJ futures which occur in the latter half of each year. As you can see, when the hurricanes hit, the price pops.