Around the Globe, the Weather has Turned Extreme

12/17/2010 Extreme weather sparks global commodities rally (Reuters) - Around the globe, the weather has turned extreme, driving up prices for commodities running the gamut from sugar and wheat to heating oil and orange juice. Australia, for instance, is suffering from both extremes -- with drought in the west and deluges in the east. Heavy snow in Europe and sub-freezing temperatures in the United States are likewise fuelling the weather rally in commodities. Nicknamed the Land Down Under, Australia typically ranks as second in the league of global sugar exporters after Brazil, but rains have forced its top sugar exporter Queensland Sugar Ltd (QSL) to consider buying raw sugar from its South American rival and from Thailand to keep up with its export commitments to sugar buyers. Brazil too has felt the effects of harsh weather on its sugar. Dryness has hurt yields and cut the volume of cane its crushers expect to process. ICE sugar futures eased Wednesday after India said it would allow some 500,000 tonnes of unrestricted exports, but were still hovering near a 30-year high. Farmers across eastern Australia are assessing the effect of the wettest spring on record. The quality of the waterlogged wheat crop is suffering, and much of what is expected to be a record harvest has been downgraded from high-quality wheat used to make noodles in Asia and flat bread in the Middle East to grain fit for animal feed. And in the western part of the continent, drought has cut the annual wheat yield by two-thirds. "Some sellers believe the global supply picture will remain tight in the near future and that the impact of the weather damage to the Australian crop will again become a central issue soon," said a grains trader in Germany. In China, dry late fall weather may have affected pre-winter development of wheat in some areas. "This crop will depend on favourable early spring rains to meet current yield prospects," commercial weather forecaster Meteorlogix said. In Europe, snowfall has helped young wheat plants withstand a spell of freezing weather in the European Union's top two producers, France and Germany, but is contributing to sowing delays that threaten Italy's next crop. Forecasters are expecting farmers to sow more wheat in the EU for 2011, encouraged by a rally in world prices this year after a severe drought curbed supply from the Black Sea region. In the United States, ice on key grain shipping waterways has slowed the flow of corn and soybean barges from elevators in the U.S. Midwest to export terminals at the Gulf Coast. The thickening ice may close northern sections of the Illinois River later this week. U.S. orange juice futures rallied to a 3-1/2 year peak early this week amid fears that frigid weather would damage the orange crop in the top producing state Florida. And earlier today citrus growers in Florida said their groves got mauled by sub-freezing weather overnight. U.S. heating oil futures hovered near 26-month highs as bitter cold descended on the heavily populated U.S. Northeast, the world's biggest consumer of the wintertime fuel. Energy demand peaks annually during the northern hemisphere winter and early winter cold snaps helped push U.S. crude futures to a 26-month high earlier this month. New snowfalls and frost are expected across Europe from Thursday. French power usage hit an all-time high of 94,200 MW Tuesday as temperatures dipped below zero, forcing households to turn up their heating. European spot power prices doubled over the past days with Germany's spot day-ahead prices reaching a year-high, exceeding last January which was one of the coldest months on record. In France, a new power usage peak was expected Wednesday although spare import capacity and a restart of a number of nuclear reactors would help meet demand. In Britain, where the majority of heaters are fuelled by gas, prices were still not far off the peaks observed during the supply crisis this summer. The cold spell has also boosted demand for heating fuels on both sides of the Atlantic but plentiful stocks and fuel substitution could prevent price spikes in the European oil products market this winter, analysts said. "The Germans don't care about the cold -- they bought back in September and don't need to buy again until February or March," said one London-based distillates trader. In China, some parts of the country could run short of coal, oil, power or gas at times during the next few winter months, China's top economic planning body said in a statement Wednesday. Australia and Indonesia's coal miners have lost production due to flooded mines, and rain has also hampered transportation. The La Nina weather anomaly, which is raising concerns over Argentina's corn and soy crops, could hit the South American country again next season and cause even worse damage to yields, a climate specialist said.   Fibre System Plus (30 packets/box) http://shaperite.my4life.com/shopping/productdetail.aspx?mode=0&iid=224&cid=198 • Contains 27 herbal extracts to provide thorough, comfortable intestinal cleansing and purification • Provides the perfect gastrointestinal cleanse to start any nutritional regimen