It’s not only global wheat prices which are rising as a result of the wet weather in Eastern Australia.
Coking and thermal (steaming) coal prices are rising on spot markets thanks to a shortage of product, especially from Queensland’s huge mines, where a number of companies have or look like they will suspend contract shipments (called declaring force majeure) because of a shortage of stocks and reduced mining rates.
We have already seen how the failure to export around two million tonnes of coal from the Central Queensland mines in September when the big wet first hit, cut the quarter’s export income and impacted on the GDP figures released last week.
Now we could be looking at a repeat this quarter from the problems in the Queensland coal industry, the state’s sugar industry (which is facing lower production and exports) and the grain (wheat and barley mainly) in NSW and Victoria.
And it could extend into January and February, if weather predictions are accurate.
We will get an updated impact of that on the grain industry next week (see next story).
But already Macarthur Coal (which has forecast a strong rise in December half earnings) has had to halt exports of its Pulverised Coal Injection product (PCI) because of a shortage of coal.
And the recently floated QR National reported yesterday that some of its central Queensland operations had been impacted, but so far there was no impact on its earnings forecasts.
And there are suggestions the rise in prices will push up March quarter coking and thermal coal contract prices which are based on market indexes and spot prices.
There were suggestions yesterday that BHP Billiton is looking at an 8% increase in coking coal prices for the March 2011 quarter for its quarterly contract customers in Asia, led by Japanese steel mills.
The main coal index for thermal coal deals on the East Coast has jumped to the highest level since early 2008 (before the boom peaked), according to reports on various news services and industry newsletters.
The globalCOAL Newcastle index rose to $US116.22 a tonne on Monday, the highest since February 2008.
The early start to the annual wet season is now affecting about 40 open cut coal mines in Queensland’s Bowen Basin and nine local government areas have been declared natural disasters.
(The wet seems to many in the industry, to have really started from September.)
Many Queensland mines were recovering from flooding and heavy rains earlier this year and in 2009.
There’s a threat of more rain later in the week, especially in NSW where the Hunter Valley mines were affected earlier in the year.
Macarthur Coal declared force majeure last week due to heavy rains depleting stockpiles at its Coppabella and Moorvale mines while the Issac Plains mine, a 50-50 joint venture between listed Aquila Resources and Vale (the big Brazilian miner) has also declared force majeure.
Macarthur is the world’s largest producer of low volatile pulverised injection coal mined from the Moorvale and Coppabella collieries and used for steel making.
The company says it is monitoring the impact of the "unseasonal" rain on "its previous guidance".
Macarthur shares finished up1.8%, or 23c at $12.76.
Meanwhile the recently floated QR National said yesterday that while many of its rail lines in the coal belt have been affected by flooding and heavy rain, no impact on earnings is expected.
QR National’s rail network carries export coking, thermal and PCI coal from many of the mines in central Queensland, especially in the Bowen Basin, to the five main export terminals on the coast.
The company told the ASX yesterday, "As a result of unseasonal weather, there have been temporary closures of a limited number of QR National’s network systems.
"All systems affected by the weather have been re-opened and are now operational.
"QR National remains committed to servicing its customers who have also been affected by these unseasonal rains.
"Despite these weather conditions, there has been no material impact on the coal tonnages hauled. QR National remains on track to achieve its published earnings forecast."
QR National shares ended up 2c at $2.70.
Besides coal, the sugar harvest in Queensland has been delayed and exports will be down because of lower yields and production.
