The inclement global weather conditions experienced during 2010 have impacted many businesses and industries. One area that has been particularly badly hit was commodities. The prices that companies pay for commodities have been rising steadily and a lot of that rise has been due to the weather.
In the summer, Russian crops were hit by the heatwaves experienced across the country which pushed global wheat prices to highs from which they haven’t fully recovered. In Brazil, a lack of rain has limited the sugar cane yield of the worlds top producer. This winters extreme cold has impacted energy commodity prices across the UK and Europe. Frost damage (the extent of which is still unknown) in Florida will affect the price of orange juice due to crop damage from the colder than normal winter they have experienced. Finally, the recent flooding in Australia along with rains in Indonesia and Colombia, have seriously affected the worlds production of coal. In the case of Australia this has had a knock on impact to the steel producing industry as Queensland, Australia is the worlds biggest producer of the coking coal required to fire steel production plants.
If 2011 continues to throw unusual weather patterns at us then we could see a continuing trend for rising commodity prices and potential shortages of much needed coal. It will be interesting to see which industries have managed their risks properly and hedged the prices of these commodities or even hedged against the weather conditions that cause such shortages.
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