Extreme weather sparks global commodities rally

Jim Regan
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.

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