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Freezing Siberian Winds Boost Europe Power Prices, Hit Crops

February 03, 2012

(Updates French, German prices in fifth, 13th paragraphs.)

Feb. 1 (Bloomberg) -- Freezing weather across Europe sent wheat and electricity prices higher and disrupted some transport lines, with parts of the region preparing for their lowest temperatures in more than 60 years.

The cold snap has claimed 43 lives in Ukraine, 26 in Poland, 13 in Romania and five in Bulgaria. Temperatures fell to a 65-year low for the period in Bulgaria and the lowest in 60 years in some regions of Russia. France braced for temperatures on Feb. 3 to drop as many as 11.3 degrees Celsius below average for the time of year, while Hungary, is preparing for daytime temperatures as low as minus 15 this week.

“A wave of exceptional cold weather is on its way from Siberia, which will be at its peak this weekend,” Meteo.it, an Italian weather service, said on its website.

While the cold snap has hit eastern Europe harder so far, Siberian winds will also cover the western parts of the region this week, weather services said. The cold weather is caused by a high-pressure system across northern Russia that’s pushing Siberian air as far south and west as Morocco, MeteoFrance said on its website.

Electricity for tomorrow in Germany, Europe’s biggest market, jumped to its highest since Nov. 23, climbing 14 percent to 60.50 euros a megawatt-hour. Wheat climbed to the highest in more than four months amid concern that frost in parts of the Black Sea region may harm crops.

Colder Yet

Europe’s cold snap comes as the U.S. Northeast prepares for more seasonal weather. In recent days, temperatures have reached the high 50s across much of the region, including New York. The high in Central Park may be 59 degrees Fahrenheit (15 Celsius) today, according to the National Weather Service.

Temperatures will fall to as low as minus 25 degrees Celsius (minus 13 Fahrenheit) this week in one of Russia’s main wheat-growing regions of southern Rostov, the Federal Hydrometeorological Center said on its website. Wheat for March delivery rose as much as 1.4 percent to $6.75 a bushel on the Chicago Board of Trade, the highest price for a most-active contract since Sept. 21.

In Warsaw, temperatures were as low as minus 18 degrees Celsius today, and are set to fall to minus 21 degrees tomorrow, according to CustomWeather Inc. data on Bloomberg.

“An air flow from east of Poland and the Black Sea, associated with a powerful high pressure system over the north- west of Russia, is bringing colder and colder continental air,” MeteoFrance said.

Frozen Black Sea

The Black Sea has frozen as far as 100 meters into the sea and blizzards blocked roads and cut electricity to dozens of towns in Romania since Jan. 26. In the Ukraine, which is suffering the worst winter in six years, snow and wind disrupted electricity supply to 13 towns and villages in three regions.

Luka Koper d.d. halted shipping traffic into and out of Slovenia’s only port because of strong winds, Sebastjan Sik, the company spokesman said in a phone interview today.

The arrival of cold winds in western Europe comes after a mild start to winter. The average temperature in northern France ranged from 5 to 10 degrees Celsius in January, three to four degrees above normal. It will plunge to minus 10 this week. Trucks were banned starting last night on some highways in southern France because of icy roads.

Power prices for tomorrow in France, Europe’s second- largest market, rose as much as 29 percent to 73 euros a megawatt-hour, the highest since December 2010. French demand may rise to a record 97,000 megawatts on Feb. 3, the electricity network RTE said.

Disruptions

In Italy, the cold weather came with heavy snowfall after an unusually dry winter. The highway from Pisa inland to Florence was closed earlier today because of the snow, and trucks heavier than 7.5 tons have been banned in four central regions, Autostrade SpA said. Schools closed in Genoa and Pisa.

Last night’s Italian soccer championship match between Parma and Juventus was canceled because of snow, and at least two more matches scheduled for today have been scrapped.

In the Czech Republic, train traffic was disrupted in several areas as the frost damaged rails.

All flights out of Istanbul were canceled as airport workers struggled to clear the runways and ramps. Some of the city’s main roads were blocked. Heavy snowfall is expected across much of Turkey today, weather authorities said.

The Swedish Meteorological and Hydrological Institute today issued a warning for most of the eastern coastal region where thin ice may form in the Baltic Sea after an unusually mild December and January, it said on its website. February will start with temperatures under normal, SMHI said.

Gas Supplies

Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s dominant gas company, reduced supplies to three industrial customers, while pipeline operator Gaz-System SA will ask the government to release mandatory reserves of the fuel to stabilize the system as cold boosted demand.

The cold snap boosted Poland’s daily gas consumption to some 65 million cubic meters of gas per day, PGNiG said today. That’s 41 percent higher than average consumption in December, Polkowska said. Gaz-System expects the daily use of the fuel to rise to 70 million cubic meters.

Romania was forced to boost its natural-gas imports in the past week after consumption increased by 20 percent to a record and is expected to rise further in February, according to Deputy Economy Minister Claudiu Stafie.

OAO Gazprom, Russia’s natural-gas export monopoly, said it’s raising supplies to Europe from underground storage and pipelines.

Meeting Obligations

“The company has engaged all of its gas transportation routes and significantly boosted supplies from its underground storage facilities in Europe to meet export requests,” the Moscow-based gas supplier said today in a statement.

Gazprom said it is meeting contractual obligations to customers in Europe, which gets about 25 percent of its gas from Russia.

The Hungarian government called on public utility companies not to suspend services during the cold spell to people not paying their bills. Electricite de France’s local unit, EDF Demasz announced it won’t switch off electricity for non-paying households through Feb. 12.

-- With assistance from Phoebe Sedgman in Melbourne, Lars Paulsson and Elizabeth Konstantinova in London, Alexander Webb in Frankfurt, Edith Balazs in Budapest, Marek Strzelecki in Warsaw, Marco Bertacche and Dan Liefgreen in Milan, Ladka Bauerova in Prague, Sibel Akbay in Istanbul, Marina Sysoyeva in Moscow, Irina Savu in Bucharest, Boris Cerni in Ljubljana, Kim McLaughlin in Stockholm and Daryna Krasnolutska in Kiev. Editors: Vidya Root, Balazs Penz

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net


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