Tuesday, May 2, 2017

With Prices up 8% in 30 Hours Wheat Markets Await Crop Tour Results, Amid Debate over Cold Damage

The tramp through the wheat fields begins today.
A twofer from Agrimoney:

Wheat markets await crop tour results, amid debate over cold damage

The US is poised for a thaw, after the weekend storms some estimate have cost more than 2.5m tonnes in wheat production – and which is placing extra stress on results of a high-profile crop tour.
Weather service MDA said that in the central US "temperatures will moderate over the course of this week", after weekend storms which brought rains of up to 6 inches to parts of the Corn Belt, and snows reported at 20 inches in parts of the central Plains.
The warm-up will "limit additional damage" to crops hurt by the weekend tempests, which also brought high winds which MDA said "led to some lodging of the wheat crop" – ie, the snapping of wheat stalks.
The improved conditions and snow melt – albeit likely to be accompanied by fresh rains in many areas - will also allow a better assessment of the extent of crop damage, in particular in the Plains hard red winter wheat belt, but with some losses expected in Midwest soft red winter wheat too.
Crop loss estimates
According to MDA, the "cold temperatures, particularly in Kansas, caused damage to about a third of the crop, especially in areas where snow cover was minimal, with about 10% of the crop potentially facing irreversible damage".
In volume terms, Richard Feltes at Chicago broker RJ O'Brien flagged "early estimates of large hard red winter wheat loss" of some 100m bushels, equivalent to 2.7m tonnes, although he added that figures on this scale were "likely to be scaled back in coming weeks"....

A few hours earlier:

Wheat prices up 8% in 2 days, as US woes spark 'explosion'
So just how big will the explosion in wheat futures be?
Many commentators have been cautioning that speculators were dicing with trouble in the wheat market, in building up a record net short position (as of latest data, for a week ago) in Chicago (the world benchmark) at a time when prices were already not far from 10-year lows, and when there were some weather worries around.
One observer, Water Street Solutions, said at the weekend that hedge funds' stance was "starting to feel like hosting a cigar party in the gunpowder room". This a week after cautioning that the extensive net short had left the market like a geyser, waiting to blow.
This before investors appreciated just how dire weekend weather in the US had been when, as Joe Lardy at broker CHS Hedging said, "a major winter storm hammered the western Plains states".
These included Kansas, the top producing state, and centred on hard red winter wheat, as traded in Kansas City.
'Heavy snow and cold temperatures'
"Some areas receive little snow but heavy rains, other areas were buried in over a foot of snow," Mr Lardy said, with high winds an issue too, breaking wheat stalks.
According to Agritel, in "some region of Texas, 30cm (12 inches) of snow have been registered".
MDA talked of snows of up to 15 inches.
While snow is not a problem for wheat in the winter, out of dormancy, the crop becomes far more susceptible to damage from cold. (Besides, much crop which did not receive snow battled with heavy rains and flooding.)
The "heavy snow and cold temperatures put the heading and flowering hard red winter wheat crop at risk", Benson Quinn Commodities said.
"Total damage won't be known until harvest," meaning plenty of scope for speculation and counter speculation ahead of that on the size of crop losses.
'Big crop losses'

As to the extent of the damage on production, Richard Feltes at RJ O'Brien flagged "early estimates of large hard red winter wheat loss" of some 100m bushels, equivalent to 2.7m tonnes, if adding that such ideas were "likely to be scaled back in coming weeks....

"Hedge funds lift bearish ag bets near to record - spurring weather rally talk"
"The Last Remaining Cheap Asset"

July futures 457'2  +1'2 Here's the 60 minute chart from the CBOT/CME: