(Agrimoney) – The threat to crops in the northern US from cold temperatures isn’t over.
“Frost and freezes are expected again Wednesday morning in northern and central Minnesota, central and northern Wisconsin,” said Terry Reilly at Futures International.
But temperatures “will not be as cold as Tuesday morning”, which reduced the scope on this score for support to crop prices, on ideas of harm to seedlings.
The freezes earlier in the week are reckoned to have caused little harm.
“Fears of damage to principle crops due to cold [early Tuesday] temperatures were lessened as the coldest temperatures stayed well to the west of eastern North Dakota corn and soybean crops that have barely emerged at this point,” said Brian Henry at Minneapolis-based Benson Quinn Commodities.
‘One exception’
Actually, there is one crop believed to have sustained potentially more serious harm.
“The one exception is the canola crop in western regions of North Dakota and into Saskatchewan as, historically, that crop has shown some susceptibility to the lows reached overnight in many of these areas,” Mr Henry said.
Terry Reilly said that “canola damage was suspected in the south western Canada Prairies early Monday”.
But Winnipeg canola futures in early deals struggled to build on modest gains of the last session, and eased 0.1% to Can$460.00 a tonne as of 09:40 UK time (03:40 Chicago time).
Other threats
And investors were more enthusiastic in their selling of the main Chicago crops.
OK, cold US and Canadian temperatures are not the only threats to crops worldwide, notably over wheat-growing areas, with some worries over dryness in Canada too, in Alberta and western Saskatchewan particularly, and in parts of Russia.
Then, looking longer term, there is the El Nino, which is linked to dryness in places such as South East Asia and eastern Australia, although the latter is receiving some rainfall right now.
“Weather forecasters are expecting rainfall to now move out of southern grain regions and head north through New South Wales over the next day or so,” said Tobin Gorey at Commonwealth Bank of Australia.
‘Disease potentials running high’
And then there is the extreme wetness in the southern US, where “weather forecasters are discussing floods and rainfall that is setting, or close to, records”, Mr Gorey said.
Futures International’s Terry Reilly said: “Central US Plains flooding and wet weather disease potentials are running high,” adding that “Oklahoma and northern Texas crops are most at risk”.
In fact, wet Texas weather is of particular importance to cotton investors, with the state being the top US producer of the fibre, and sowings progress already well behind the average, and looking likely to remain so.
But even New York cotton for July eased, by 0.1% to 64.32 cents a pound – a small fall but a significant one, in taking the contract below its 75-day moving average.
Clear for a month
There appears little new, for now at least, in the weather threats to spur further upward progress in grain futures.
And there appears little on the horizon for the main Corn Belt crops.
At RJ O’Brien, Richard Feltes said that, for US row crops, the “reality is that the potential for the first stress on the 2015 crop unlikely before June 20 at the earliest”.
“We are hard pressed to imagine any cogent arguments for a reversal in bear market trends, given the strong start to the northern hemisphere growing season and no sign of weather adversity for next 30 days” – at least in the main corn and soybean growing regions.
Currency factor
Further recovery in the dollar, up 0.2% against a basket of currencies, was an extra pressure, making dollar-denominated assets that much less affordable as exports.
That said, the dollar could face volatility ahead, with investors looking forward to the minutes of the Federal Reserve’s April meeting, which will be scoured for clues as to when the central bank may start raising interest rates from record lows.
It is a run of softer US economic data, in pushing back the likely data of a rate rise, that have fuelled the dollar retreat since late March.
‘Economic strain from bird flu’
But for now, wheat for July eased 0.7% to $5.06 ¾ a bushel in Chicago, still though, it has to be said, remaining above its 50-day moving average, and well above an early-month low of $4.69 ¼ a bushel, thanks to revived weather threats.
And fellow grain corn fell 0.4% to $3.60 ½ a bushel for July, amid continued comment on the US bird flu outbreak which, in provoking flock liquidations, threatens to curtail feed demand.
“US egg producers are starting to feel the economic strain from bird flu as some selected companies are renegotiating contracts,” Futures International said, noting that bird flu “has been identified in 35 countries since early 2014, and has affected more than 32m birds within the US”.
The US Department of Agriculture earlier in the week highlighted how it was in the egg producing flock that bird flu has been particularly prevalent, if of course affecting only a tiny proportion of overall numbers.
Argentine strikes
Soymeal is a big poultry feed ingredient in the US too, and Chicago’s July contract in the soy processing product dropped 0.7% to $305.00 a short ton.
That in turn pressed soybeans, which fell by 0.6% for July to $9.40 ¼ a bushel.
OK, there is much comment over industrial action in Argentina, a major soybean exporter, and the top shipper of the soy products.
“Strikes in Argentina are increasing,” Futures International’s Terry Reilly said, noting “reports of new random road blacks in Rosario that early this week by crush and biodiesel workers.
“Argentina strikes by the Industrial Oilseed Complex Workers Federation, which accounts for roughly 20% of the Argentina crush industry, has now lasted two full weeks.”
However, Argentine exporters “have not seen any soybean shipments being switched to the US amid slow oilseed and grain loadings”, he said.
CHS Hedging said: “Although the Argentine strike has not been resolved, it does not appear it has had much of an impact on exports.”
