CRISISBOOM

Queensland is roughly the size of France and Germany, however the catastrophic floods of Australia will be felt worldwide. Queensland premier Anna Bligh said the flooding was unprecedented in the state and had now directly affected 40 towns, raising the number from 22 and affecting 200,000 people. “We are unable to move anything by rail or, of course, road,” David Ginns, corporate affairs manager at GrainCorp told Reuters, adding that transport of grain to port elevators from inland areas had effectively ceased, and the domestic distribution network had also been impacted.  Ten people have died during the disaster.

Australia’s record floods are causing catastrophic damage to infrastructure in the state of Queensland and have forced 75 percent of its coal mines, which fuel Asia’s steel mills, to grind to a halt, Queensland’s premier said on Wednesday.  “Seventy-five percent of our mines are currently not operation because of this flood,” Premier Anna Bligh told local television. “So, that’s a massive impact on the international markets and the international manufacturer of steel.” Queensland state is the world’s biggest exporter of coal used in steel-making and contributes more than 40 percent of the global seaborne trade.  Steelmakers in Asia may be forced to pay as much as 33 percent more for hard coking coal after the flood.  Full-year sales of metallurgical coal has been revised down from 6-6.5 million tonnes to 5.8-6.2 million tonnes.

Queensland’s winter grain crop has been totally destroyed by flooding. It is estimated that it will cost the industry about $400 million.  Australia’s wettest spring on record have damaged the crop quality in the world’s fourth largest wheat exporter, stoking supply concerns and pushing up already high global wheat prices.  It is possible that half of the national crop or about 10 million tonnes could be downgraded to animal feed or low-grade milling grains.

The floods will have a devastating impact on summer crops of sorghum and cotton greatly reducing yield. Prices began to surge last summer after a drought in Russia and the Black Sea region decimated the crop there and shut off exports. In recent months, wet weather in Australia and dryness in U.S. wheat areas have raised fears over supplies.