The market wires this morning are using the US weather map as a means to explain the sudden down turn in US wheat futures prices overnight. The SRW belt is looking to see a bit of rain this week but a closer look shows the HRW belt is not. It’s possible that once this spat of fund selling / profit taking clears due to end of month / quarter business we may start to see HRW spreads to SRW start to improve as drier conditions persist across much of Texas, Oklahoma and Kansas.
The weather punters also fail to mention the extreme cold now gripping much of the US wheat belt and this right after a period of abnormally high temperatures. Some parts of the Midwest do have enough snow cover to protect the young wheat but from about mid Kansas south and across a big swath of the SRW area there is little to no snow cover. Temperatures in Topeka Kansas are expected to drop as low as -21C tomorrow. Further NE in central Indiana temperatures will get down to as low as -23C and stay cold for much of this week, snow cover there will be as little as 1 – 3cm which will offer little protection to young wheat crops. East into Ohio is a similar picture with even colder temperatures expected. Only time will tell if this does result in some winter kill but it is a taste of what may spike this US wheat market, if not global prices, in the short term.
The local US fundamentals do not appear to be having an impact on US wheat futures at present, this is not as uncommon as you might think.