The US was blasted by an arctic front that plunged an area from the Canadian border to Texas in subzero conditions. Parts of Kansas recorded temps in the minus 30C for prolonged periods of time, with an average temp over three days of just -17C. Areas as far south as the Gulf of Mexico is seeing citrus frozen on tree’s, water pipes bursting and an energy crisis because renewables and oil couldn’t be utilised.
Frost damage can be a tricky beast to determine, and it is obvious from watching price moves in wheat, that the market is having trouble calculating the damage. In three days since the cold hit, we have seen the market lift 20¢/bu, only to fall 13¢ a day later, then record another 15¢/bu rally last night. Speculative money is pouring back into wheat on the belief (prediction?) that a fair percentage of the wheat crop has been smoked. Much of the northern areas of Kansas to the Dakota’s had adequate snow coverage to protect the crop from winter kill. South of Kansas, snow coverage is spotty and the duration of the extreme cold has the potential to cause some damage. Adding to the concern is that we are not going to have an answer until Spring when the crop breaks dormancy.
Estimates of the area that may have been affected range from 15-30% of the winter wheat area. Within that area, the questions will continue to swirl of how much damage has been done. Wheat is a tough plant and with a good spring, crops can compensate pretty well. If damage is severe enough, US farmers may have the option to resow with corn or spring wheat.
Compounding the US hard freeze, Argentina is on track to record its 2nd driest season in 30 years and its northern neighbour Brazil is still suffering harvest delays due to wet weather. With all this going on, the ag market doesn’t know which way to turn.
Wheat feeling the cold
The US was blasted by an arctic front that plunged an area from the Canadian border to Texas in subzero conditions. Parts of Kansas recorded temps in the minus 30C for prolonged periods of time, with an average temp over three days of just -17C. Areas as far south as the Gulf of Mexico is seeing citrus frozen on tree’s, water pipes bursting and an energy crisis because renewables and oil couldn’t be utilised.
Frost damage can be a tricky beast to determine, and it is obvious from watching price moves in wheat, that the market is having trouble calculating the damage. In three days since the cold hit, we have seen the market lift 20¢/bu, only to fall 13¢ a day later, then record another 15¢/bu rally last night. Speculative money is pouring back into wheat on the belief (prediction?) that a fair percentage of the wheat crop has been smoked. Much of the northern areas of Kansas to the Dakota’s had adequate snow coverage to protect the crop from winter kill. South of Kansas, snow coverage is spotty and the duration of the extreme cold has the potential to cause some damage. Adding to the concern is that we are not going to have an answer until Spring when the crop breaks dormancy.
Estimates of the area that may have been affected range from 15-30% of the winter wheat area. Within that area, the questions will continue to swirl of how much damage has been done. Wheat is a tough plant and with a good spring, crops can compensate pretty well. If damage is severe enough, US farmers may have the option to resow with corn or spring wheat.
Compounding the US hard freeze, Argentina is on track to record its 2nd driest season in 30 years and its northern neighbour Brazil is still suffering harvest delays due to wet weather. With all this going on, the ag market doesn’t know which way to turn.
The week ahead….
Expect the whipsaw action to continue as the market grapples with weather induced uncertainties.
Have any questions or comments?
Click on graph to expand
Click on graph to expand
Click on graph to expand
Data sources: Reuters, Ag World Weather, NDSU, Mecardo
Categories
Have any questions or comments?
Surprise in WA gives a new record for wheat.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released their February Crop Report last week, and it contained a few upgrades. Thanks
Wheat feeling the cold
Another choppy week in the Ag markets this week. This time the catalyst has not been political interference or distorted trade, but weather. Really cold
US cold snap spikes CBOT wheat
Forecasts of unseasonally cold temperatures of -15C in some US states, carrying the potential to kill planted wheat crops; are bullish for the US wheat
WASDE focus on demand
Much of the news this week has centred around the USDA’s World Agricultural Supply & Demand Estimates (WASDE) report. Pre-report, much of the money was
Don’t have an account with us? Join free.
You can have full premium access to all of our content with a monthly or annual subscription.
Alternatively, create a free account to access our Insights blog and two free premium article a month!
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.