T K Futures and Options Advises Active 2007 Hurricane Season May Send Commodities to Record Highs

  T & K Futures and Options Inc. believes that an active hurricane season in the Gulf of Mexico might send many commodity market prices violently higher. Hurricane forecasters are predicting a hurricane season similar to 2004-2005, the years of Katrina and Ivan.

Hurricanes can have a major impact on certain commodities depending where they hit. However, keep in mind that the commodity markets usually have factored in potential hurricane damage before a hurricane hits. Past commodity futures market reactions to hurricanes are no guarantee of similar responses to hurricanes in the future.

Hurricanes in the Gulf of Mexico can cause the many crude oil and natural gas platforms to be evacuated. This lack of production and potential for hurricane damage can send crude oil futures, natural gas futures, heating oil futures and unleaded gas futures prices violently higher. Hurricanes that threaten actual refinery areas in Mexico, Texas and Louisiana also can cause huge price volatility in energy futures, especially the refined products such as unleaded gas futures and heating oil futures prices. Refining capacity in the US is very limited because a new refinery has not been built in over 30 years.

If hurricane damage occurs in a major shipping location such as the Mississippi Delta area any commodities that are being shipped or stored in the area may be affected. Soybean futures, corn futures and wheat futures prices are sometimes affected by shipping delays and coffee futures by storage facility damage.

Potential hurricane damage to Florida can affect orange juice futures, sugar futures and lumber futures prices. Orange juice futures prices are especially susceptible to any weather related problems because of the damage inflicted by 3 hurricanes that hit the Florida orange groves in one year. The hurricane damage to the orange crop caused orange futures prices to reach all time highs.

The extreme precipitation volumes that accompany hurricanes can also head up into the grain belt flooding crops and hindering the planting and harvest process. Soybean futures, corn futures, and wheat futures prices are especially susceptible to an over abundance of moisture during planting and harvest.

The author is a 13 year veteran of the commodity futures and options markets and the President of T & K Futures and Options Inc. Futures and options trading are very risky and only risk capital should be used. Past performance is no guarantee of future results and commodity future trading and future option trading may not be suitable for all investors.