Eyjafjallajökull is not just a word people can’t pronounce. It is the picture of a global crisis smeared with plumes of ash and dire financial repercussions.

First the airline industry, then tourism, and now cargo – industry after industry is falling prey to the knock-on effects of the current volcanic eruptions in Iceland. These eruptions continue to unnerve global financial community with the threat that they could set off a much larger neighbouring volcano, Katla. If that were to come to pass, its economic exposure could pull another industry into its growing circle of impact; commodities.

Volcanic ash stays in the atmosphere long after an eruption ends, and blocks out sunlight, which can dramatically affect crops. The current volcanic activity is spewing ash into the atmosphere and is already over mainland Europe. They could affect crop yields this summer.

Climatologists say that a repeat of the devastating Laki eruptions in 1783 is unlikely, but commodity analysts are watching the event closely.

“They are especially interested in the impact on Europe’s rapeseed (canola oil) crop,” says Evelyn Browning Garriss, a climatologist and editor of The Browning Newsletter, a publication on stocks, dedicated for experienced investors. “There is also interest on the potential impact on wheat,” she says.

This eruption, she says, is small but if this level of activity continues to last until May, then it would have a much more serious impact on early crop development.

“Europe would be hit by wave after wave of cooler weather and disrupted rainfall patterns,” says Garriss.

Experts from various financial sectors are keeping their fingers crossed over a possible chain reaction.

“If the current volcano re-erupts or the larger volcano located nearby were to be triggered, then you are looking at widespread global impacts,” says airlines analyst Robert Kokonis of travel consultancy Air Trav Inc in Toronto.

Most commodity traders don’t look at long-term weather patterns or accommodate catastrophic events, says Dr Tim Ball, an environmental consultant in Victoria. “I assume that at some point once the harvest looks bad, they’ll have to accommodate it, but I am not aware of them taking this into account,” says Dr Ball.

He does make a startling revelation that may hide important investment clues for commodity traders though.

“The ironic thing is that the volcanic dust, once settled back to ground, is probably the best fertilizer in the world,” he explained.

He says that when Mount St. Helens erupted (in Washington State in 1980), away from the major ash fall area, as far east as Calgary the crop yields were four to six times higher than normal.

“Volcanic soils are the most fertile soils,” says Dr Ball.

Experts are unanimous in their opinion that it is too early to tell if commodity traders are expecting a run up in the price of wheat, which would result from a crop failure.

“It’s too early to tell,” says Dr Ball. “A cool summer in Europe and Russia will have an impact (on wheat crops). Traders will have to factor in there is going to be a lower harvest, generally, because of both prevalent weather pattern since 2000 and this volcanic eruption.”

He says, though, he is not aware of any commodity trader who is doing that.

Similar observations were made by Garriss. “At the moment, the news stories about the volcano are concentrated on the airline impact,” she says. “I notice a number of wheat traders, particularly Canadian traders, are monitoring the event, but I don’t see any great expectations – yet.”

She says they seem to be more interested in the dry conditions in the Prairie Provinces.