January 2: Cold Weather Heats up Winter Wheat Prices

On Tuesday, wheat trading kicked off the 2018 year with a solid jolt.

What was Tuesday’s pop telling us?

More than just how frigid it is across the country.

On Tuesday, wheat trading kicked off the 2018 year with a solid jolt. March contracts for hard red winter wheat gained 7.5 cents in Kansas City, while March SRW contracts added 6.5 cents. What was Tuesday’s pop telling us? More than just how frigid it is across the country.

With wheat acreage at levels not seen in more than 100 years, farmers have thrown in the towel on wheat her in the U.S. As you know, it’s all about Russia and their mega-supply of wheat.

But wouldn’t you know that the smaller supply would get hammered by a cold snap that has traders chattering about Winter Kill.

The first week of the year is facing a combination of blistering gold and… very very dry weather.

From Colorado to the Indiana/Illinois line, you won’t find many places that received more than 40% of their average rainfall for the November and December months.

Combine a lack of moisture, protective snowfall, and significant temperature volatility and you now have a market with significant uncertainty about the wheat crop.

The challenge here is that we’re not going to be able to tell how much damage and how much of a threat there is to the wheat crop for a few months.

We’ll be watching the temperature dial and reports from wheat associations in the weeks ahead.

The USDA is very unlikely going to comment on the weather in their January report.

But expect that traders are going to be watching weather reports closely heading into the end of this month.

We’re going to see some opportunity for higher prices. We want to take advantage of a rally, and to take profits where they are available.

Stay tuned.  

 

Extreme cold may have damaged winter wheat

“Damage occurred in about a quarter of the hard red wheat belt in the central Plains, with about 5% of the soft red wheat belt in the Midwest seeing impacts,” said Don Keeney, Senior Agricultural Meteorologist for Radiant Solutions.

New Year’s Day lows bottomed out in the -30 to -40 degree F range in the northern Plains. Snow cover was sufficient in the northern Plains and northern Midwest to protect wheat from damage; however, snow cover was very thin in the central and southern Plains and southern Midwest.

Temperatures are expected to moderate a bit the rest of the week in the Plains, which will ease winterkill threats there. However, another cold push in the eastern Midwest late this week may result in some minor damage there to soft red wheat.

“Lows should drop below 0 F in exposed areas of southern Indiana, southern Ohio, and northern Kentucky on Friday morning, resulting in some additional winterkill,” said Keeney. Readings should then moderate a bit this weekend and early next week, which will end winterkill threats.

“Damage occurred in about a quarter of the hard red wheat belt in the central Plains, with about 5% of the soft red wheat belt in the Midwest seeing impacts,” said Don Keeney, Senior Agricultural Meteorologist for Radiant Solutions.

New Year’s Day lows bottomed out in the -30 to -40 degree F range in the northern Plains. Snow cover was sufficient in the northern Plains and northern Midwest to protect wheat from damage; however, snow cover was very thin in the central and southern Plains and southern Midwest.

Temperatures are expected to moderate a bit the rest of the week in the Plains, which will ease winterkill threats there. However, another cold push in the eastern Midwest late this week may result in some minor damage there to soft red wheat.

“Lows should drop below 0 F in exposed areas of southern Indiana, southern Ohio, and northern Kentucky on Friday morning, resulting in some additional winterkill,” said Keeney. Readings should then moderate a bit this weekend and early next week, which will end winterkill threats.

Aside from wheat concerns, Florida citrus will be looked at later this week.  There is a threat for frost possibly Thursday and Friday mornings across a large portion of the citrus belt. A lot of the citrus crop was impacted by Hurricane Irma in September.
H/T: Farm Futures
About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.