Hurricane Katrina will disrupt the US economy because it severely damaged one of America's logistics centres, writes Neil Irwin in Washington

The effects of the monster storm that devastated the US gulf coast spread through the US economy on Wednesday, disrupting shipping and rail networks and sending prices for lumber, coffee and other commodities soaring.

Hurricane Katrina is likely to drag down US economic growth in the months ahead, analysts said, threatening what has been a robust expansion.

Katrina's economic effects may be more lasting than those normally following big storms, economists said this week, owing to the severity of the damage and the unique geography of the New Orleans region.

The storm hit a chokepoint in the US economy, a concentration of ports, rail lines, barge traffic and major highways making up one of the major trade hubs in the US.

The future of New Orleans is uncertain, as is that of the $49 billion (€39.35 billion) in goods, 60 per cent of US grain exports, and 26 per cent of US natural gas supply and crude oil that flow through nearby ports each year.

"The Mississippi river is the aorta of the American economy, and New Orleans is the access point to it," said Al DeLattre, a supply chain specialist with consulting firm Accenture.

In an attempt to fend off disruptions to fuel supply resulting from the storm, President Bush moved on Wednesday to release at least one million barrels of oil from the Strategic Petroleum Reserve, a 700 million-barrel emergency stockpile. Oil prices fell slightly on Wednesday on the news.

Signs also emerged on Wednesday of the havoc the storm wreaked on the companies and transportation lines that supply the US, with dozens of firms disclosing the scope of damages at facilities near the Gulf of Mexico or simply stating that they could not yet say what that scope might be.

Union Carbide officials could not even get to their chemicals plant in Hahnville, Louisiana, the firm said on Wednesday, and it will probably take weeks to resume operations there.

Chiquita Brands International reported severe damage at the Gulfport, Mississippi, facility where it stores one-fourth of the bananas it imports from Central America.

Yellow Roadway, one of the largest trucking companies in the US, has 20 trucking terminals in the area affected by the storm, some of which may have been destroyed, chief executive William Zollars said. With major bridges near New Orleans damaged, the company is routing trucks hours out of their way.

Rail carriers Norfolk Southern, Union Pacific and Burlington Northern Santa Fe have all stopped freight traffic into the afflicted area, and shipping experts said it is hard to predict how long it will take the Port of New Orleans and other nearby ports to reopen, given that they may need to dredge new channels and make major repairs. Efforts to reach officials of the Port of New Orleans were unsuccessful.

"I don't think that there is any historical precedent for an incident of this scale," said C James Kruse, director of the Center for Ports and Waterways at the Texas Transportation Institute.

The damage might even be felt at the American breakfast table. New Orleans warehouses hold about a quarter of America's raw coffee, 211 million pounds' worth.

Concerns that importers will have difficulty rerouting coffee shipments and that large amounts of inventory have been lost pushed the price of coffee for December delivery up to $1.01 per pound on Wednesday on the New York Board of Trade, an increase of more than 3 cent, following gains on Monday and on Tuesday.

Sugar could get more expensive too: department of agriculture officials are sufficiently concerned about tight sugar supplies because of Katrina that they raised import quotas on refined sugar on Tuesday.

Exporters of US goods, especially farmers in the Midwest, may have the most to lose if New Orleans ports are out of service for a prolonged period.

The harvest is just beginning - the time when grain and other major commodities for export are carried by barge down the Mississippi river, then deposited in cargo ships to be carried overseas.

Exporters of manufactured goods might simply reroute and ship goods out of Houston or Tampa. Agricultural exporters have fewer options in shipping corn, wheat or soy beans.

Moving the crops by train might cost up to five times as much, and even then, alternative ports often lack the specialised warehouses and equipment needed to handle the crops.

If it takes more than a few weeks to fix the ports, a glut of grain and widespread spoilage could yield a disastrous season for farmers.

"If this is a week-long problem, it's probably not too damaging," said JB Penn, undersecretary of agriculture for farm and foreign agricultural services.

"But if it's much longer, then it's a real problem."

In most severe weather events, a perverse bright side to the economic outlook often emerges.After major storms an economic boom often ensues within a few weeks as residents, armed with insurance cheques, begin rebuilding their houses.

Already, in anticipation of such a boom, lumber prices have risen. Prices for lumber to be delivered in September rose $10 on Wednesday to $297 per thousand board feet. But that effect may be slower coming this time around, economists and construction executives said, because of the severity of the damage.

"If this was a normal hurricane in Florida, you'd have construction people in pickup trucks heading south right now," said Steven Cochrane, chief regional economist of Economy.com. "Instead you have the governor saying to stay away.