New York CNN Business —
Hurricane Ian is the latest natural disaster to impact food prices. The storm hitting Florida is already forcing orange juice futures to spike, and it may soon squeeze the country’s fertilizer supply — which could have a far-reaching impact.
Prices for frozen concentrate orange juice contracts hit roughly $1.92 per pound earlier on Wednesday, an increase of more than 5% from Tuesday, before moderating slightly.
Florida is a leading citrus producer, including oranges and grapefruit. At least 75% of the Florida citrus belt is under threat of heavy flooding rains over the next 36 hours, according to satellite imagery provider Maxar Technologies.
Maxar’s WeatherDesk finds that at least a third of the groves are likely to see some wind damage, mostly in the northwestern portion of the citrus belt.
Orange juice futures are up almost 30% so far this year. And the timing of the storm is difficult for farmers in Florida as citrus crops are nearing harvest season.
“There will be quite a bit of fruit drop and losses of fruit from the trees,” Maxar said.
Citrus production was already under significant pressure even before Hurricane Ian.
In July, the US Department of Agriculture estimated US production of oranges would drop by 13% in 2021/2022 to the lowest level in 55 years because of the drought in California and citrus greening in Florida. Citrus greening is a disease that causes trees to produce less fruit that is smaller in size. As a result juice producers have to use more oranges per bottle, raising their costs and leading to price hikes for consumers.
Orange and tangerine prices spiked 14.4% for the year through August. The price of juice and other non-alcoholic drinks went up 13.1% in that period.
Meanwhile, a major producer of the phosphates used in fertilizer is based in Tampa, where the storm is predicted to hit hard. The producer, Mosaic, says it provides half of all granular phosphate sold to North American farmers.
“In anticipation of substantial impact from Hurricane Ian, we have taken the appropriate steps to protect our people, mines, plants, port facilities and administrative offices,” William Barksdale, director of Mosaic’s corporate communications, said in the statement.
Mosaic said employees at its Tampa corporate office and other locations are working remotely. The company said it continues to complete preparations at its phosphate mining and production facilities in Florida as well as in Louisiana, adding that those preparations began last week.
When farmers spend more on fertilizer they either have to raise prices on the crops they grow, or cut back and shrink supply. Either way, higher prices get passed along to consumers.
Extreme weather is one of the main factors contributing to the massive price surge: Droughts have forced American farmers to sell off their cattle herds and destroy their own crops. In recent years, flooding has also destroyed crops and killed livestock.
The storm comes at a time when consumers are already seeing record increases in food prices. Food costs this year have spiked 11.4% through August, the largest annual increase since May 1979, according to the Bureau of Labor Statistics.
Grocery prices jumped 13.5% and restaurant menu prices increased 8% in that time period.
-— CNN’s Chris Isidore and Vanessa Yurkevich contributed to this report.