Severe weather across globe: Coffee, Sugarcane prices rise

January 20, 2015 3:29 PM |

Weather can be a wild card and recent highs in prices of certain commodities stand as a testimony to this. Till now we knew that silver and gold are driven by economic turmoil but now unpredictable weather adds to the price hike of other essential raw material items.

2014 remained cold for commodities such as crude, wheat and copper as they touched year’s low in November and December. January continued with the trend and enveloped prices of coffee, sugarcane and palm oil, heating up the price rise.





Drought in Brazil
Severe weather across globeIt was a punishing drought in Brazil as it not only led to water crisis but affected the coffee growing regions of Brazil. Arabica coffee is up 2.6% this year at $1.71 after a 50% price surge last year due to shortfall in output. World's biggest coffee producer and exporter Brazil, accounts for a third of global production, has been hit hard by drought last year.

Similar situation was observed for sugarcane. While the affects were started to loom last year as Brazil's center-south cane region produced 118,000 tonnes of sugar in the second half of December, down sharply from 371,000 tonnes in the first half of the month, yields are expected to be below normal by 70% this year in the absence of sufficient soil moisture. Dryness is expected to be observed this month too.


Floods in Malaysia
  Severe weather across globeTorrential rain towards the end of December 2014 in Malaysia caused the worst flooding that the country faced in last 50 years. Result: Crop damage, output damage and infrastructure damage to the palm fruit. Palm oil price rose to a two-month high. Malaysia contributes a third to the world’s palm oil and floods led to an eight year low in its output.




Mild winter in USA
  Severe weather across globeIt was a volatile winter for natural gas in U.S. as natural-gas futures jumped almost 10%, two-year low. January is the time when most households consume natural gas through centrally heated homes and offices. The consumption peaks in January, followed by February.  However, natural gas prices are down almost 33% since mid-November as an unusually mild start to winter.







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