Wheat markets are jumpy this winter as they juggle a host of hot market potatoes.
The latest thing to keep the market boiling is, ironically, a deep freeze in western Kansas.
A snowstorm laid down a helpful blanket on the eastern fringe of Kansas but left the western expanses of vulnerable crop exposed.
“It will be weeks before we know anything about what damage may have occurred,” said Rich Nelson of Illinois market analysis firm Allendale, Inc.
“It is the tough question to answer right now.”
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Kansas and Oklahoma are home to much of the United States’ hard red winter (HRW) wheat crop. It straddles the divide between generally more expensive hard red spring wheat like that grown in Canada and the cheaper soft red winter wheat grown east of Kansas.
Day after day last week, the Kansas City Board of Trade’s HRW May futures contract saw intraday swings that cancelled each other out as the weather and Egypt’s political crisis sent markets conflicting signals.
Oklahoma State University HRW analyst Kim Anderson said he thinks the net impact of the U.S. storm might be zero because of its counterbalancing impacts of the cold and snow.
“Any damage (from cold) may be offset by increased yield potential caused by snow in the northern Oklahoma and southern Kansas (region),” Anderson said in a Feb. 3 commentary.
“Except for the extreme portion of the western Oklahoma panhandle, Oklahoma’s driest wheat area received timely moisture as well as snow cover to protect the wheat from the freezing temperatures.”
Snow provides moisture and a protective blanket for winter wheat, shielding it from fatal temperatures.
The cold was well into the killing zone, with lows of -18 to -20 C forecast for a few days. More freezing weather was forecast for this week.
The U.S. HRW crop is already in trouble after having been seeded into dry soil. Added shocks like this can be bad news for the crop and drive prices higher.
Winter wheat becomes progressively weaker through the winter as its reserves are drained.
The same cold in December will have less impact than it would in February or March, when the crop is on its last legs.
