Tropical storm Isaac: Why are Florida orange juice prices falling?

Tropical storm Isaac hit Puerto Rico Thursday and could be a Category 1 hurricane by Friday. Florida orange juice prices surged, but are now dropping as traders no longer fear a big hurricane.

By Tom Brown,?Reuters / August 23, 2012

Tropical Storm Isaac unleashed heavy rain and winds off Puerto Rico and the Virgin Islands on Thursday and was expected to strengthen into a hurricane before tearing across the Dominican Republic and Haiti, U.S. forecasters said.

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Isaac also posed a big threat to Florida, where it could make landfall on Monday as the Republican National Convention is due to start in Tampa.

Authorities have not ruled out the possibility of postponing or relocating the Republican convention if the storm takes direct aim at the city on Florida's central Gulf Coast. But Craig Fugate, director of the Federal Emergency Management Agency, said the convention was not his biggest concern, at least for now.

"People are spending a lot of time talking about that," Fugate said of the convention. "I wish they'd be talking about making sure people in the (Florida) Keys are getting ready and that people in southwest Florida are getting ready," he told CNN.

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The storm could also affect U.S. energy interests in the Gulf of Mexico, with analysts at Weather Insight, a Thomson Reuters company, giving it a 50 percent probability of moving into the heart of the oil and gas production region.

Isaac is forecast to approach Florida on Monday as a Category 1 hurricane, the lowest on the five-step Saffir-Simpson scale, but some computer models show it may swing farther west into the Gulf of Mexico. "Significant uncertainty remains about the threat Isaac poses to Florida," the U.S. National Hurricane Center said.

The threat to Florida triggered a 14-percent rally in orange juice prices in trading in New York earlier this week.? Prices pulled back on Thursday as panic buying over the previous two days subsided.

Florida accounts for most U.S. orange juice output, which is about 700,000 tonnes a year. "As long as it's Category 1 coming into Florida, it lessens the chances of it being destructive," said James Cordier, founder and president of Liberty Trading Group in Tampa.

The National Hurricane Center said Isaac was centered about 165 miles (255 km) south of San Juan, Puerto Rico, on Thursday afternoon and was moving westward at 15 miles per hour (24 kph).

The storm's top sustained winds dropped to 40 mph (65 kph) overnight, but the Miami-based NHC said re-strengthening was forecast over the next 48 hours and Isaac could become a hurricane on Friday before it reaches Hispaniola.

Source: http://rss.csmonitor.com/~r/feeds/csm/~3/zGiBPvgBXLE/Tropical-storm-Isaac-Why-are-Florida-orange-juice-prices-falling

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