“It was a very wet, late crop and it is very hard to store.”
– don roose, u. s. commodi ti es
Brutal winter weather across much of the United States has helped rally commodity markets as energy demand rises, crops are hit with snow or frost and livestock movement is slowed.
Two strong winter storms battered the U. S. midsection in December practically back to back, and January has brought continued cold and more snow.
Intense winter weather is not uncommon for the central part of the country, but so much cold and snow in a short period of time swept across the Dakotas down to Florida’s citrus groves rattling commodity markets.
“This type of a cold outbreak is something that occurs every three to five years,” said Mike Palmerino, a forecaster at DTN Meteorlogix in Boston. “But Florida is getting the worst of the unusual weather. There will be some minor fruit damage.”
Recent Florida temperatures have ranged between -2 and 1C – chilly, but not cold enough to devastate citrus crops, Palmerino said.
Still, U. S. orange juice futures climbed to a 22-month peak this week on fears that the 2009-10 citrus crop, already at decade lows, could see further reductions.
Energy prices also have rallied as the continued cold weather has raised demand for heating oil and fuel.
U. S. crude oil futures climbed for a 10th straight session on Jan. 6, ending above US$83 a barrel despite government data showing a surprise increase in crude stockpiles last week.
The Midwest and parts of the Plains were bracing for more snow and another wintry blast. The Midwest could see between one and five inches of snow this week, and temperatures were not expected to rise above -6C.
The frigid conditions were helping lift prices for feedstocks, such as corn and soymeal, by raising demand for animal feed and slowing truck and rail deliveries.
“The weather has been price supportive… prices have moved up on uncertainty,” said Don Roose, president of U. S. Commodities in West Des Moines, Iowa, in the heart of the U. S. corn and soybean belt. “It was a very wet, late crop and it is very hard to store.”
As of Dec. 20, North Dakota still had more than 30 per cent of its corn crop in the fields, much of it covered by snow. Nationally, five per cent of the corn crop, roughly 600 million bushels, was unharvested, the U. S. Department of Agriculture reported.
Winter storms have blasted Nebraska, slowing movement of cattle and hampering weight gain, factors that helped lift cattle prices for producers who have been losing money for more than a year, analysts and traders said.
“When the animals have lower weights, producers will try to wait to bring them to market, which slows movement. Then the poor travel conditions slow transport. All of this helps support a higher market,” Roose said.
Cash soymeal dealers said livestock producers stepped up their purchases last week, covering their needs ahead of this weekend’s snowfall.
Ice built up on some key U. S. Midwest rivers last week and slowed the movement of barges carrying corn and soybeans from the heartland to the U. S. Gulf, the top export point for agricultural goods.
South Dakota’s Department of Public Safety closed a portion of Interstate 90 on Jan. 6 due to stormy conditions. Blowing snow reduced visibility to near zero and vehicles stopped because drivers could not see, the state’s public officials reported.