Fears about a surge in prices of beef and orange juice in the US, plus rising fears about the health of soybean corn crops on Brazil and Argentina, are starting to dominate commodity markets.
Drought in Texas and other parts of the state is the driver behind the surge in US beef prices to record highs last week, while disease is driving frozen orange concentrate to 34 year highs.
Both could impact Australia, lifting beef prices here as growers divert beef into the US market, while a US ban on trade in frozen orange juice because of the presence of an illegal fungicide and now a destructive bacterial disease in the US industry, will have an impact here because many producers import frozen juice concentrate to add to local fresh juice.
The fungicide is commonly used in Brazil, but is banned in the US. It has been detected in some juice already on the market in America. Testing is still underway on samples of juice from Brazil.
Concentrate prices have jumped 25% so far in January and last week hit levels last seen in 1979.
Beef prices are up 17% in the past year and have accelerated this month as growers realise that last year’s bad drought in Texas and other southern states has reduced the amount of natural feed available.
Texas is also a major orange juice producer and the bacterial disease has appeared in trees in orchards in that state as well as in Florida.
And US traders and processors are starting to worry that soybean prices are going to surge as drought cuts the size of the huge Brazilian and Argentine crops.
Despite heavy rains in the coastal states (mostly the iron ore producing areas) this month, drought in the huge agricultural states of Brazil and northern Argentina have damaged the merging crops.
Brazil is the second largest producer after the US; Argentina is the 4th (with China 3rd). China is the biggest importer.
Meanwhile gold prices rose on Friday and silver hit a five week high as the US dollar continued to weaken against the euro.
The euro breached the $US1.30 level for a while and finished just shy of that level.
That was a rise of 2%, based on the close of $US1.2931, the biggest weekly gain since October.
The Aussie dollar gained as well, but it has withstood the pressures of the greenback’s strength over Christmas- New Year.
The euro is on the rise as tensions and fears about the eurozone ease.
Gold rose for the third time in four days on increased demand for the precious metal.
Silver jumped to a five-week high.
Comex gold futures for February-delivery rose 0.6% in New York on Friday night to settle at $US1,664 an ounce.
Prices climbed for the third straight week, up 2%.
Silver for March delivery jumped 3.8% to $US31.675 an ounce.
Prices surged 7.3% this week, the most since last October as investor confidence rose.
Oil fell to the lowest level in a month, despite the weakness of the US dollar.
Oil prices fell 1.9% on Friday.
Nymex crude for February delivery dropped $US1.93 to $US98.46 a barrel. The contract expired on Friday.
The more active March contract fell $US2.21 to $US98.33.
Brent oil for March settlement fell $US1.69, or 1.5%, to settle at $US109.86 a barrel in London.
Comex copper futures for March delivery fell 5.6c in new York on Friday to $US3.745 a pound.
But it ended up 3% for the week.
