| NEW YORK
NEW YORK Feb 20 Global commodities trader
Cargill Inc lost at least $100 million after a
weeks-long bout of frigid weather in the United States sharply
lifted power and natural gas prices, an industry publication
reported on Thursday.
Cargill lost most of the money in the PJM power market, the
Pennsylvania-based electric power grid operator, online industry
publication SparkSpread.com reported on Thursday. Arctic weather
in January forced power prices to a high of $1,500 per megawatt
hour (MWh), some 30 times the average.
SparkSpread did not cite any sources on the losses.
The commodity trading and agriculture conglomerate has
emerged as one of those with some of the largest losses after an
unusual streak of frigid weather plagued much of the United
States, driving record heating demand.
David Toole, the firm's physical trading manager for North
America in Cargill's Thermal Energy Supply Chain (TESC) unit,
which trades power, natural gas and coal, left the company on
Wednesday and will be replaced by Mike Newman, gas trading
manager in Calgary, who will relocate to Houston, the report
A spokeswoman for Cargill declined to comment on the
financial performance of the company's energy trading business.
She confirmed that Newman has been appointed as physical
trading manager for North America in Cargill's TESC unit.
A loss of $100 million would be significant for
Minneapolis-based Cargill, which last month reported net
earnings of $556 million for the quarter ended Nov. 30.
It was unclear exactly how Cargill lost money on the trades
but some in the business speculate that they were carrying
"short" positions in the PJM market, meaning they expected
prices to fall.
For example, a company would lose out if it sold power at
$50 per megawatt hour (MWh) in December for January delivery and
held that position into the actual spot month.
Since the first of the year, next-day PJM power prices
averaged $100 or more per MWh on 13 days, including four days
above $400 per MWh. That is well above the five-year average
price of $55 in January and $44 in February.
Funds and trading houses who posted large losses in natural
gas and power since the Arctic chill set in simply may not have
accounted for a "tail risk" or the likelihood of a rare or
one-off event like the coldest winter in 30-years, veteran fund