NEW YORK - Orange juice futures contracts reached their highest levels in two years Wednesday as a prolonged freeze in Florida endangers crop production.
"This is purely weather driven," said Richard Feltes, senior vice president and director of commodity research at MF Global.
Prices for frozen orange juice concentrate have risen sharply this week and went as high as $1.4965 per pound during trading Wednesday — levels not seen since December 2007.
Other commodities have also gained this week, but mainly for other reasons such as investors rebalancing portfolios in the new year and the declining dollar.
Orange juice contracts for March delivery backed off their highest levels late in the day, falling $1.50 to settle at $1.4205 per pound. The contract has gained 10 percent so far this week.
Arctic air is expected to remain across much of the south through the weekend, which would continue to plague citrus crops. Feltes said long-range forecasts indicate Florida could face another bout of "extremely cold weather" in February, which would further undermine production this year.
The cold weather comes at the peak of the orange crop season and could severely damage the supply for the year. A sharp drop in the supply of fresh oranges would push demand for frozen orange juice concentrate higher.
Florida's governor signed an order Wednesday that would provide farmers with assistance because of the cold temperatures.
Energy prices were also getting a boost from the deep chill that has descended over much of the country, which is expected to push demand higher for oil and gas.
Benchmark crude for February delivery rose $1.41 to settle at $83.18 in the New York Mercantile Exchange. It was the first time since the fall of 2008 that prices climbed above $83 a barrel.
Natural gas futures for February delivery rose 37.2 cents to $6.009 per 1,000 cubic feet. February heating oil contracts rose less than a penny to $2.2032 a gallon.
A weakening dollar has pushed metals prices higher in recent days. Matt Zeman, chief market strategist at LaSalle Futures Group, said Federal Reserve Chairman Ben Bernanke's affirmation over the weekend that interest rates would remain at historically low levels was keeping the dollar low. That in turn has sent investors into the commodities market. Commodities are often priced in dollars so foreign demand rises when the dollar weakens.
The ICE Futures US dollar index, which measures the dollar against a basket of currencies, fell 0.3 percent and is down about 0.7 percent since the beginning of the week.
Gold, which has been a major beneficiary of a declining dollar, rose $17.80 to settle at $1,136.50. Silver for March delivery rose 37.5 cents to $18.175 an ounce.
Copper again hit a new high during trading Wednesday, even though copper workers in Chile at one of the world's largest open-pit operations called off a strike a day earlier. Copper for March delivery rose 8.1 cents to settle at $3.4945 per pound. The price climbed as high as $3.522 earlier in the day.
Elsewhere, March wheat rose 14.25 cents to $5.6725 a bushel, while soybeans fell 2 cents to $10.59 a bushel. Corn rose 3 cents to $4.2175 a bushel.