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Weather Market Season Has Arrived

U.S. wheat crop dinged but not killed.

Wheat markets surged higher last week with a strong gap Monday morning. A late spring blizzard over the weekend produced heavy snow that blanketed a huge swath of hard red wheat country from the panhandles up into Nebraska.

Wheat fields across the western third of the central Plains were laid flat under as much as 20-plus inches of snow. Numerous reports of snapped stalks suggested that damage would be permanent.

The blizzard followed a week that already had some light freezes across much of the central Plains that appeared to have already stressed wheat plants, making them more vulnerable to the heavy snow and cold.

In what was very good timing, the hard red winter wheat tour was also last week. But assessing wheat yields on snow-covered fields was impossible, so they didn’t. They did find a fair amount of freeze-damaged heads and lots of disease issues. The average yield estimate from the tour was 46.1 bpa, compared with the long-term average of 41.6 bpa.

That number raised a few eyebrows and then some shrugs, as it simply doesn’t tell the story of what is happening on the Plains. And frankly, no one will know for at least another week and likely until harvest. But we do know that insurance adjusters are combing the western Plains, and farmers are eager to plow up fields.

With plantings at their lowest since records began (about 100 years ago), and farmers desiring to plant anything but wheat, it looks like the love affair with wheat is over. Which, from my perspective, is a good time to think about getting bullish the wheat complex.

The world needed a production problem in one of the major exporting countries to at least stop the bearish mentality. We can check that off. At worse, we will likely move into a sideways market until another production problem comes along.

We could be looking at the beginning of that as well, again, here in the U.S. Far too much rain and flooding in the southern Midwest has a lot of soft red wheat standing in water, threatening disease problems. Another frost over this past weekend likely did some damage, to boot.

But there is another problem developing, and that is in corn. Very slow planting progress, and now the need for a large area in the southern Midwest to be replanted, will push corn pollination later into the heat of summer.

Corn and soft red wheat have had a very close price relationship these past couple of years, and a bull market in either one would spill over to the other.

For as disappointing and discouraging as the grain markets have been recently for the producer, the fundamentals are experiencing a shift. This growing season has the potential for some big moves in the grain complex, and I think it’s time to shift our attitudes toward a more bullish outlook.


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