Hurricane Threat Lifts Juice, Cotton, Lumber

Orange juice, cotton and lumber futures prices jumped Thursday as speculators bought on fears that Hurricane Frances would do even more damage to Florida and the East Coast than the recent Hurricane Charley.

The massive storm barreling toward southeastern Florida could deal the second of a one-two punch to the state’s $9.1-billion citrus industry, the nation’s largest, which only three weeks ago was ravaged by Hurricane Charley.

At the New York Board of Trade, frozen concentrated orange juice futures for September delivery rose as high as 85 cents a pound, then closed at 79.4 cents, up 2.1 cents from Wednesday and the highest price in more than a year.

“If this storm does hit where people are expecting, I think we still have higher to go,” said Jim Cordier, a broker at Liberty Trading Group, in St. Petersburg, Fla.

Earlier this summer, juice futures were languishing at the lowest prices since 1976 because of excessive inventories. Florida, which grows 80% of U.S. oranges, has produced near-record crops in recent years.

Even after Charley, juice brokers had said that there were enough stocks in cold storage to avert a shortage.

But two hurricanes in one season “has never happened before, and certainly not of this intensity,” said Judith Ganes, president of J. Ganes Consulting in Katonah, N.Y.

The main risk is that Frances could uproot many more mature citrus trees, shrinking the industry’s infrastructure.

Cotton futures rose on concerns that potentially heavy rains could damage maturing cotton crops throughout the Southeast, depending on the path Frances takes, analysts said.

Near-term cotton futures in New York added 0.6 cent to 54 cents a pound, the highest since mid-June.

Lumber prices jumped as many Floridians rushed to buy plywood to board up homes and businesses. A further squeeze on timber was expected as the state rebuilds after Frances passes.

Lumber futures for September delivery set a life-of-contract high and closed at $455.50 per thousand board feet, up $9.20, on the Chicago Mercantile Exchange.

But some analysts questioned the jump in prices, saying the amount of lumber needed for rebuilding in Florida would be relatively small compared with total annual U.S. timber demand.

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Price squeeze

Orange juice futures in New York, price per pound, weekly closes and latest

Thursday: 79.4 cents

Source: Bloomberg News