CNS Canada — U.S. wheat futures rose sharply on Monday and could continue to increase due to cold weather in the southern Plains and the political unrest in Ukraine.
“We had this (cold) in the weather forecast,” said Austin Damiani, a U.S. wheat analyst from Frontier Futures in Minneapolis. “The forecasts are calling for even colder temperatures. So we’re looking at potential damages for winter wheat and winter wheat is already stressed in the southern Plains.”
Drew Lerner, a specialist from World Weather Inc. in Kansas City, said the most damage from frost will likely happen Tuesday morning.
“Crops further to the south, in the areas of Oklahoma and Texas, are the areas we’re concerned with,” said Lerner. “Those two states and the state of Arkansas may be in a position of receiving some damage tonight, but the percentage of crops that would be getting damaged is going to be very small. I just can’t see how it would be widespread and real impacting.”
Freeze warnings are currently in effect for as far south as the Texas Panhandle for the period from Monday evening to Tuesday morning. Thursday and Friday will also bring cold air into the region, but not as intense as Tuesday morning.
This cold snap has an even bigger impact on the winter wheat that is already vulnerable from a lack of precipitation, Damiani said.
“The wheat is stressed and generally has received about 50 per cent of average rainfall here,” he said. “We saw some weekend precipitation but not really in the dry areas of the south. Those are the lower yielding areas.”
Increasing tensions in Ukraine are also a factor in increased prices.
“It sounds like the situation has really destabilized,” said Damiani. “There are reports of Russian military troops taking over buildings in Ukraine and causing general unrest, so we’re seeing an escalation in conflict there.”
Damiani added it will be difficult to say if the price will continue to climb throughout the week.
“We’re really at the mercy of Mother Nature with the freeze warnings on one hand and what’s going to happen in Ukraine and Russia on the other hand,” he said.
— Marney Blunt writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.