The effect of the big freeze in the American winter wheat region will likely be the key grain market mover this week and next as our story on page 13 notes.
Damage was likely more severe if the frost hit mature plants. As of April 8, 13 percent of the Oklahoma crop and 16 percent of the Texas crop had headed. None of the big Kansas crop had headed.
Snow came with the cold in some areas so that would have provided insulation, reducing the damage.
The frost drove up wheat futures prices, but at our press deadline on April 9, they were off the peak reached earlier in the day.
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We will update the situation next week, but we might wind up with a similar situation to 1997. That year, freezing temperatures April 12-13 led to speculation that the crop would be four million tonnes smaller than expected. The plants recovered, however, and produced a huge 51.24 million tonne crop.
With grain stocks so tight this year and so much speculative money in the markets, changes in the weather have the potential to spark extreme volatility in prices.
The U.S. National Oceanic Atmospheric Administration last week updated its assessment of the situation in the equatorial Pacific Ocean, the source of El Ninos and La Ninas, but it didn’t make the growing season weather outlook any clearer.
The agency said conditions are still consistent with a trend toward a La Nina, which is a cooling of Pacific water and the opposite of an El Nino.
A La Nina could cause drier than normal conditions in the U.S. corn belt and more Atlantic hurricanes. A dry summer would reduce the likelihood of growing the record large corn crop needed to feed growing ethanol demand.
However, while the trend exists, the NOAA said its computer models show much uncertainty over when the La Nina might actually develop and how strong it would be.
