Winter Storm and Arctic Blast Hit Wheat and Cattle Country: How Are Markets Responding?
Winter Markets 122122
Winter is packing a punch across much of farm country this week. After the Northern Plains saw ice and a few feet of snow last week, they are getting more precipitation. Meanwhile, an arctic blast is hitting wheat and cattle country.
However, the weather is being somewhat ignored by the trade. While winter wheat is dormant, market analysts say the markets need to be giving the weather more respect. Hard and soft red winter wheat came into the winter with one of the lowest ratings in history at only 34% good to excellent, and Texas, Kansas and Nebraska were only 21% good to excellent. Areas of western Kansas and southern Nebraska missed last week’s snow. However, market analysts say Kansas City wheat has very little, if any, weather premium built in.
Allison Thompson, with The Money Farm, says: "I don’t think we’re going to see a large premium built into winter wheat. Winter wheat seems to have nine lives and we’re kind of on our first life with the talk of winterkill. I do think it's worth noting there isn’t a lot of snow cover down South this year, so these cold temps are definitely going to affect the crop."
Those same arctic temperatures are going to reach all the way down to Texas impacting a large part of cattle-feeding country, decreasing performance. But market analysts say the cattle market isn’t trading that news either.
Brad Kooima, Kooima Kooima Varilek Trading, says: "This weather is being underappreciated by these techy computer traders, algorithm deals that don’t have manure on their boots frankly. They don’t understand the kind of weight loss and the kind of stress cattle went through on the first storm but especially what they’re going to go through this week when we get to 50-below zero."
He says up until now weather has been ideal and cattle performance has been outstanding, but the cold will increase feed consumption and decrease weights.
Kooima says the February live cattle futures should be trading at $5 to $6 above the cash but instead are below cash. He says the markets have been caught up in year-end fund liquidation and recessionary or demand concerns.
