Tropical storm Isaac: Why are Florida orange juice prices falling? (+video)

Tropical storm Isaac hit Puerto Rico Thursday and could be a Category 1 hurricane by Friday. Florida orange juice prices surged, but are now dropping as traders no longer fear a big hurricane.

By , Reuters

Tropical Storm Isaac unleashed heavy rain and winds off Puerto Rico and the Virgin Islands on Thursday and was expected to strengthen into a hurricane before tearing across the Dominican Republic and Haiti, U.S. forecasters said.

Isaac also posed a big threat to Florida, where it could make landfall on Monday as the Republican National Convention is due to start in Tampa.

Authorities have not ruled out the possibility of postponing or relocating the Republican convention if the storm takes direct aim at the city on Florida's central Gulf Coast. But Craig Fugate, director of the Federal Emergency Management Agency, said the convention was not his biggest concern, at least for now.

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"People are spending a lot of time talking about that," Fugate said of the convention. "I wish they'd be talking about making sure people in the (Florida) Keys are getting ready and that people in southwest Florida are getting ready," he told CNN.

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The storm could also affect U.S. energy interests in the Gulf of Mexico, with analysts at Weather Insight, a Thomson Reuters company, giving it a 50 percent probability of moving into the heart of the oil and gas production region.

Isaac is forecast to approach Florida on Monday as a Category 1 hurricane, the lowest on the five-step Saffir-Simpson scale, but some computer models show it may swing farther west into the Gulf of Mexico. "Significant uncertainty remains about the threat Isaac poses to Florida," the U.S. National Hurricane Center said.

The threat to Florida triggered a 14-percent rally in orange juice prices in trading in New York earlier this week.  Prices pulled back on Thursday as panic buying over the previous two days subsided.

Florida accounts for most U.S. orange juice output, which is about 700,000 tonnes a year. "As long as it's Category 1 coming into Florida, it lessens the chances of it being destructive," said James Cordier, founder and president of Liberty Trading Group in Tampa.

The National Hurricane Center said Isaac was centered about 165 miles (255 km) south of San Juan, Puerto Rico, on Thursday afternoon and was moving westward at 15 miles per hour (24 kph).

The storm's top sustained winds dropped to 40 mph (65 kph) overnight, but the Miami-based NHC said re-strengthening was forecast over the next 48 hours and Isaac could become a hurricane on Friday before it reaches Hispaniola.

"The structure of Isaac suggests that only slow strengthening is likely. However, environmental conditions are favorable for rapid intensification, which could occur if the cyclone develops a well-defined inner core," the NHC said.

Hispaniola is the island shared by the Dominican Republic and Haiti, the latter of which is highly prone to flooding due to deforestation and mountainous terrain.

Isaac was expected to dump between 8 and 12 inches (20 to 30.5 cm) of rain over some parts of Hispaniola, with total accumulations up to 20 inches (51 cm) in some areas, the NHC said. "These rains could cause life-threatening flash floods and mud slides," it warned in an advisory.

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Haiti, the poorest country in the Americas, still has 400,000 people living in tents or makeshift shelters more than 2 1/2 years after a devastating earthquake that took more than a quarter of a million lives.

In the U.S. commonwealth of Puerto Rico, authorities also braced for flooding as Isaac slowed down but swung farther south of the island than initially predicted.

"Our big worry is flooding," said Governor Luis Fortuno, who ordered schools and government offices to remain closed for a second day.
"We are preparing for the worst and hoping for the best," he said.

FLORIDA PANHANDLE LANDFALL?
Some computer forecast models on Thursday shifted west, while others showed Isaac skirting across the north coast of Cuba before cutting across the Keys island chain and southern tip of Florida on Monday.

Several forecast a final landfall in the Florida Panhandle, in the northwest corner of the state, although one model put the storm moving almost directly over Tampa.

Jeff Masters, a hurricane expert at private forecaster Weather Underground, said that if Isaac tracked west through the Gulf of Mexico en route to the Florida Panhandle, there was a chance the storm could become a Category 2 hurricane.

"The storm would probably have an extra day over water, increasing the odds that it will become a Category 2 or stronger hurricane," he wrote in his blog at www.wunderground.com.

At the Guantanamo Bay U.S. Naval Base in southeast Cuba, Isaac forced the postponement of pretrial hearings that were to begin on Thursday for five prisoners accused of plotting the Sept. 11, 2001, attacks on the United States.

Florida has not been hit by a major hurricane since 2005 and forecasts showed Isaac was not expected to strengthen beyond a weak Category 1, with top sustained wind speeds of about 80 mph (129 kph).

In addition to Isaac, the NHC said Tropical Storm Joyce formed on Thursday over the open Atlantic.

The 10th named storm of the Atlantic hurricane season, Joyce formed about 1,305 miles (2,105 km) east of the Caribbean's Leeward Islands and had maximum sustained winds of 40 mph (65 km). It was not forecast to gain hurricane strength.

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