Hurricane Ida stopped the operation of individual terminals in the United States, but did not lead to higher prices

The south-east of the United States was hit by the most powerful hurricane Ida in the last 16 years, which stopped the operation of oil rigs, oil and grain terminals, damaged equipment. However, grain prices did not react to this event and continued to decline.

The impact of hurricanes on the oil market is short-lived, as before bad weather, enterprises evacuate personnel and conserve capacity, and after 1-2 weeks they gradually resume work. At the same time, the decrease in production is compensated by a reduction in processing volumes, so the market almost does not experience a shortage of supplies.

Yesterday's decision by OPEC+ countries to gradually increase oil production by 0.4 million barrels per day by the end of 2022 also increased pressure on prices. It is expected that by the end of this year, the market will continue to have a shortage of oil, and in 2022 it will turn into a surplus.

November Brent crude futures on London'S ICE Futures fell 1.2% to 7 71.38/barrel in two days, while WTI crude on New York's NYMEX fell 1.4% to.68/barrel.

The main export terminals of international companies that export 60% of grain are located in the US Strait of Mexico. Some of them were damaged by the hurricane, so the shipment may stop.

So, the CHS grain terminal may remain without electricity for several weeks, as the hurricane damaged the largest grain port in the United States. Cargill reported significant damage to the terminal in reserve, Louisiana, and Bunge and ADM are still assessing the damage caused to their businesses.

Despite this situation, major crop futures declined in Chicago SWOT yesterday:

• December corn futures-up 2.9% to 2 204.3/ton (losing 6.7% since Monday),
• November soybean futures-up 1.5% to 4 468.8/ton (-3.8%),
• December wheat futures – 1.7% to 2 261/ton (-3%).

The main reason for the decline remains the low pace of export sales and the lack of demand from China, which last year actively bought American agricultural products during this period.