As Hurricane Katrina’s smashing blows fell on the Gulf Coast, commodity traders did what they always do when uncertainty hits the pits: They sold.
Futures prices for America’s Big Six – corn, soybeans, wheat, cotton, live cattle and live hogs – all stumbled lower when information-starved traders quickly moved to the sidelines as the catastrophic storm moved inland.
It hit them. Soon thereafter, the buy-and-sell boys began to realize what almost every U.S farmer has known since mid-July: The market-making weather event of the year was the summer-long, widespread drought, not day-long, deadly Katrina.
Indeed, Katrina’s wet wake won’t noticeably rock 2005 grain or livestock supplies or demand. Most were locked in weeks, if not months, ago by God.
Commodity traders finally figured this all out over the three-day Labor Day weekend. They then came back bullish Sept. 6, pushing nearly all ag futures prices above pre-Katrina levels.
Moreover, the rumors about New Orleans grain export facilities being shut down for weeks – even months – were proven largely false that same day when, as Dow Jones News reported, “Several grain export elevators owned by agri-giants Bunge Ltd. and Archer Daniels Midland Co.