Jack Frost Sends Markets Skyward

Cold weather swung across the Eastern United States this week, with freezing temperatures stretching from the Upper Midwest down to Central Florida. The unseasonably cold weather damaged fruits, vegetables and livestock across the South. On the expectations of frost damage, orange juice futures made a three-year high at $1.70 per pound, up 14% in one week.

Other fruits and vegetables grown in Florida were threatened as well, including tomatoes, green beans and sweet corn. Florida growers warn that the damage to their crops could cause significant shortages this year, driving prices higher.

In addition to agricultural markets, natural gas prices spiked higher this week on expectations of increased heating demand across the United States. More than half of all homes in the U.S. heat using natural gas. Despite the fact that natural gas stockpiles are near record highs, prices climbed to a three-month high at $4.63 per million British thermal units.

Biofuels Bolstered

Tax credits for ethanol and biodiesel are expected to be extended as part of the upcoming Congressional tax bill. Ethanol, a corn-based biofuel, is blended with gasoline throughout the Midwest and may continue to receive a 45 cent per gallon credit. Biodiesel, often made from soybean oil, may regain its $1 per gallon credit.

The ethanol and biodiesel industries are largely dependent on the government subsidies, and the potential continuation of these subsidy programs has given strength to the corn and soybean oil markets. This week, soybean oil glided to 54.34 cents per pound (+2%), while corn climbed 6 cents to $5.79 per bushel (+1%).

Copper Approaches All-Time High

Copper climbed to $4.15 per pound this week, nearing its record high price of $4.27 per pound made in 2008. Copper continues to gain value on strong Chinese demand and an ongoing strike at a major Chilean mine. Over the last three weeks, copper prices jumped more than 50 cents per pound, up 15%.