With Hurricane Patricia bearing down on Mexico, commodity traders at Mexico City Mercantile Exchange have been forced to expect lower supplies of tortillas in the coming months, and that has caused the massive increase in price by 6,000%.
“It’s a supply and demand issue. As when a hurricane hits Florida and orange juice prices rise, a hurricane hitting Mexico has the same effect on tortillas,” said Morningstar analyst Steve McMichaels. “Tortillas are now a global export with demand increasing in Europe and parts of Asia. So the jump in price makes sense.”
The market closed Friday at $2,784.67 per ton compared to $54 per metric ton the previous Friday. The market is expected to be closed Monday due to the storm. “It’s definitely a sellers market on tortillas right now. We are looking for a ‘Buy’ action in several weeks when we fully understand the damage done,” said McMichaels.
The hurricane has weakened from a Category 5 to Category 4 but is still predicted to be the biggest Pacific storm ever to reach land. As Mexicans brace for extremely high winds and massive rainfall, the future of tortillas is unknown.
Tortilla farmer Jose Fernandez of Guadalupe told the Mexican Gazette, “We have never seen anything like this. We are just simple folk, farming what we know. There is no telling what this storm might do.
“Tortillas flying at 150 miles per hour are like deadly ninja stars. We pray for everyone’s safety.”
Damage is expected to reach into the billions of dollars. Global relief is on standby and will help clean up after the storm. The Red Cross has mobilized their units and has set up emergency centers wherever possible.
The price of tortillas are expected to be back to normal by December, but the continued risk of an El Nino winter has traders on the edge of their computer desk.
