Wheat Reacting to Colder Weather Than Expected

Wheat has been on a wild ride the past couple of weeks. A strong rally for the first half of March fizzled out last week with a sharp drop on Thursday. Friday was stable as we headed into a weekend with cold temperatures forecast across the Plains.

And cold it was. Temperatures were much below expectations, with a chilly 15º in the north Texas panhandle and a downright frigid 5º in eastern Colorado and western Kansas. Any wheat that was jointed and saw those temps is at least hurt — and likely significantly hurt. 

The coldest region is also where the dry conditions were as we headed into last weekend, which could turn out to be its saving grace. The dryness slowed progressed despite the warm spring so far, and likely kept wheat from being advanced enough to do damage, at least in the Colorado/Kansas region.

However, further south into Oklahoma and Texas, wheat was in the more advanced stages and early reports out of Oklahoma suggest notable damage occurred at least in the panhandle. That well could be the case in the Texas panhandle, too.

Wheat is a tough plant. And frost damage is very difficult to measure—unless it outright kills the plant. If the weather is accommodating, it can bounce back and it might not even see a yield decline. We’ve seen that happen numerous times. 

But the forecast now is for hot temps in that region for a few days, then cooling down again with the potential for another hard freeze this weekend, which happens to be a three-day weekend for the Easter holiday. 

It appears that the long range climatology forecast for a cool spring in the plains is materializing. Rains are still sketchy at best, and it is critical that NOAA’s projection of a wet April comes to fruition.

Things will remain dicey for hard red winter wheat. Soft red winter had a rough start this spring as well with vast flooding across the south; we’ve yet to see how much damage occurred. We haven’t even talked about the spring wheat crop yet where a dry and warm winter across the northern Plains is evolving into a similar weather pattern for spring. Plantings are expected to decline notably for spring wheat, so a dry spring could really light the fuse for the wheat market.  

Recent weather events certainly underscore a bullish outlook for the wheat complex. That said, we have to keep in perspective that U.S. wheat stocks are nearly 1 billion bushels (that is very big). World stocks are record large. European weather has been nearly ideal for their wheat crop. 

Black Sea wheat is just beginning to wake up, so we’ll have to wait a bit on their crop. It had a poor fall planting season with Ukraine acreage down about 30%. The Black Sea will probably be the kicker this season. Even with weather problems here in the U.S., wheat upside potential is rather limited. Throw in another production problem in a major producer, and now you have a big market in the making. Stay tuned, we’ll know soon.

Courtesy: agriculture