December 8, 2005

 

Arctic air hits US winter wheat
 

US winter wheat, which turns dormant during cold US winters, is enduring a particularly early blast of arctic air, sparking talk of potential winterkill in vulnerable Southern Plains wheat fields - but futures prices have failed to rally on the concerns, analysts noted Wednesday.

 

"We're usually thinking about these really cold temperatures in January, and it's kind of strange to be thinking of them in early December," said Bill Nelson, a grain analyst at AG Edwards & Sons. "You have to wonder how hardy the crop is."

 

"It always depends, but minus 23 deg C starts to be a really critical level in the Plains area, while the Midwest, it's sometimes more toward minus 18 deg C," he added. "It's such a difficult call on the winterkill, when it's such a marginal situation. It's one thing if you get to minus 29 deg C with no snowfall. It's just one of those borderline cases and I think it's important to acknowledge it."

 

"It's always a concern and we'll be concerned about it all winter," added Shawn McCambridge, a grain analyst at Prudential Financial. "But expectations for an increase in (US) winter wheat acreage this winter temper that a little bit. And also it's too hard to determine whether damage took place or not until the crop breaks dormancy."

 

Hard red winter (HRW) wheat fields across parts of the US Southern Plains are particularly in the spotlight as dry autumn conditions hurt early crop development.

 

Hard red winter wheat, a grain with 9 to 14 percent protein, is used to make bread.

 

Prices for HRW wheat for delivery at the Kansas City Board of Trade in July have actually fallen this week along with the temperatures. KCBT July wheat closed Wednesday down 2 1/4 cents at US$3.51 1/4 a bushel.

 

"A light snow event will be ongoing today (across the US Southern Plains) under very cold temperatures," said Mike Palmerino, of Meteorlogix weather service, adding that snow amounts could range from a dusting to up to two inches from the panhandle of Texas northward.

 

"Highs in the northern area of the (US HRW) belt will probably not get out of the single numbers above minus 18 deg C and they'll probably be mostly in the teens in the southern belt," he said.

 

"And it will be quite cold tonight; again we're looking at some light snow, but we're looking at lows tonight mostly in the single numbers above and below minus 18 deg C," he added. It probably will prompt fears of winterkill. Realistically, it's probably not a problem, but anytime you're talking subzero temperatures, people get concerned."

 

In the US Midwest, where soft red winter wheat is grown, low temperatures Wednesday were mostly in the single numbers and teens (Fahrenheit), Palmerino said.

 

Soft red winter wheat, a lower-protein wheat, is used to make crackers, pastries and cakes.

 

"It's going to stay quite cold throughout the week, and we're looking at a couple of additional cold mornings," Palmerino added. "Tonight and tomorrow night, many areas will only be in the single numbers and teens above zero. And then we should start a slow moderation in the weather as we go on into the weekend and the first part of next week. Low temperatures will probably rise into the teens and 20s (Fahrenheit)."

 

Still, Palmerino noted good autumn crop conditions had allowed the US SRW wheat crop to become better established before turning dormant, thereby lessening chances of winterkill damage. Besides, many US Midwest fields have at least some light snow cover.

 

Prices of Chicago Board of Trade soft red winter wheat futures for September delivery closed Wednesday down 1 1/2 cents at US$3.41 a bushel.

 

Meanwhile, in US Delta soft red winter wheat fields, cold temperatures were pushing the SRW wheat crop into dormancy following good recent rains, Palmerino said.

 

"Their lows this morning were mostly in the 20s Fahrenheit," he said. "They will be coolish, with a little bit of light rain tomorrow. So we're just looking at near to below-normal temperatures and not much in terms of precipitation as we look out into the end of the week and the weekend."

 

"The crop is much improved due to some very good rains over the last few weeks," he added. "They will go in and out of dormancy, but they can still put on growth even during the winter time, depending on how mild or how cool the winter is."

 

"Right now, they are going into dormancy, with temperatures expected to average normal or below over the next 10 days," he added. "They will probably be more or less in a dormant state."

 

Finally in the Pacific North-west, where mostly soft white winter and hard red winter wheat are grown, conditions have turned cold and dry, Palmerino said.

 

"There were actually some temperatures below minus 18 deg C this morning, but they've got about four or five inches of snow on the ground (in eastern Washington)," he said. "So it's basically just sort of a cold and dry pattern looking out over the next five days or so."

 

"Then we start to moderate as we go into the six- to 10-day period," Palmerino added. "Looking out into next week, there is no indication of any major precipitation (in the PNW wheat belt) - maybe (just) some light rains returning during the first half of next week."

 

US wheat traders would continue to monitor US winter wheat weather, particularly amid subzero temperatures or if temperatures begin widely fluctuating.

 

But analysts note the wintertime uncertainty is just part of the wheat trade.

 

"You can try to quantify any losses all winter long, but we have seen crops that have looked totally dead coming out of the winter totally flourish," Prudential's McCambridge said. "It's just very difficult to say 'this much has been lost.' "

 

"It's just one of those tough situations that you have to acknowledge," AG Edwards's Nelson said. "It's sort of a borderline situation out there. You just kind of have to play it out."