Market analyst: Cold weather could be bad news for wheat

Ray Grabanski
Special to the Farm Forum

We are now in the midst of February, with extreme cold temps the past few weeks across most of the U.S.’s midsection.

That is not only not good weather for humans (20-30 degrees below normal), but also not good for wheat. It’s likely at least some damage was done, but it could have been a lot more had it been in March, or worse yet, April, when the crop is more susceptible to freezing.

As it was, though, this might be the most severe cold spell we’ve had in decades — and it certainly didn’t help the wheat. We also have continued dry weather in western plains states with very little subsoil moisture left. With virtually no snow cover in these areas, that isn’t good for wheat, either.

Weather forecasts continue to suggest Brazil will have better weather including above normal precipitation and below normal temperatures. Argentine weather is still forecasting below normal precipitation and above normal temperatures that will offset the improving Brazil weather.

The second crop corn in Brazil will have a decent start with the cool/wet weather — just what corn will need in the tropical atmosphere in Brazil. However, the critical time is at pollination, which when planted two to three weeks late is during the dry/hot time of year. Weather attention is already starting to shift to the northern hemisphere, especially the very dry western U.S.

Last week, the Chicago Board of Trade was down four cents for wheat, down 11 cents for corn and down nine cents for soybeans for the first down week in a long time.

Winter wheat in the U.S. experienced a period of extreme cold lasting 10 days, with temperatures basically 20-30 degrees below normal for the entire period. That is extreme cold and is likely to have caused some wheat damage.

Certainly, anything out of dormancy and exposed to those temperatures is dead; but it was mid-February, so it’s not likely a lot of wheat was out of dormancy. Even wheat in dormancy and exposed to these kinds of severe cold could also lose some stand. It’s unlikely that it helped the wheat; remember, wheat prices are so low and corn/soybeans so much improved that wheat growers will want any excuse to tear it up and plant corn or soybeans. In spite of the cold, wheat prices dropped just like corn and soybeans did last week.

The U.S. Department of Agriculture (USDA) has their February Ag Outlook meeting recently, and they usually do a pretty good job of focusing on the issues likely to affect us in the next year. They are not perfect, though, but at least they have been a fairly reliable indicator of the coming year, given normal weather.

Of course, we almost never have ‘normal’ weather! But it will get some attention, especially with 120 million bushels of soybean carryout and 1.5 billion bushels of corn (and dropping). Chinese demand is perhaps the most important factor, although the USDA has a history of ignoring trade deals with China, as they did last year. Now, it seems China actually might honor the last one — maybe USDA needs to change its tune?

Beware of where you get your information. For example, I think that using a Chicago Board of Trade source for grains information is usually a bad idea.