NEW ORLEANS -- While retailers here and in other Gulf Coast regions assess the impact of Hurricane Katrina on their businesses, consumers all over the U.S. are likely to feel some of the impact in coming weeks in rising commodity prices, analysts said.
In addition, gasoline prices -- already near record highs -- spiked in many areas in the days following the storm, based on the shutdown of oil-processing facilities in the Gulf of Mexico.
Following are some of the ways that the storm could impact commodity pricing and supply:
- Gulfport, Miss., one of the hardest-hit regions, is a major location for shrimp and oyster fisheries, which were severely damaged, according to reports.
- Because New Orleans accounts for about one-sixth of the nation's coffee storage, coffee prices and supplies could be negatively impacted, some analysts said.
- Thousands of acres of peanuts, soybeans and cotton in southwest Alabama remained flooded last week, though some observers noted that clear, dry weather could help area farmers salvage their crops.
- The hurricane caused an estimated $427 million worth of damage to crops in South Florida, including 70% of the area's avocado crops, which were ruined.
On the positive side, Merrill Lynch said in a report last week the impact of Katrina on packaged goods would be minimal. "Clearly, the most impacted will be the retailing of product, regardless of whether it is a grocery store, C-store or gas station. Product that has been lost on the shelf has, in most cases, been paid for, and [the impact] would [involve] a restocking of the pipeline in the impacted areas when that becomes possible."
The impact is less clear in the commodity part of the business, Merrill Lynch said. "Louisiana is, or was, a primary export terminal [for] commodities from corn to soybeans and poultry and pork [going ] to foreign ports. There is a potential plus," the report said, "[because] the lack of ability to export corn and soybeans in the short term should put downward pressure on commodity prices."
Merrill Lynch said it is not changing any earnings or ratings projections "[because] the food chain in the U.S. is very resilient, and the biggest threat we see to earnings is disruption in the retail channels."
Standard & Poor's Ratings Services said last week the storm is likely to hurt gross domestic product in the third quarter, "shaving a few points off our forecast of 3.7% growth. Louisiana's energy-related industries will be hurt in the third quarter.
