U.S. crops are escaping record-setting cold weather with little damage, while the arctic blast drove cattle prices to a record as animals struggle to gain weight.
The coldest spots in Florida citrus groves were near freezing, and oranges aren’t damaged unless temperatures are below 28 degrees Fahrenheit for a few hours, said Dale Mohler, a senior meteorologist at AccuWeather Inc. in State College, Pennsylvania. Snow cover helped insulate wheat plants, according to DTN/Progressive Farmer. Cattle extended a rally to a record for the seventh straight session.
The frigid weather strangled transportation routes around the country including interstate highways, airlines and rails. It also led to a surge in energy demand that pushed power in Texas to more than $5,000 a megawatt-hour for the first time and caused disruptions at oil refineries in Tennessee and Illinois. Orange-juice futures fell today after climbing 2.8 percent yesterday, the most since early November.
"The worst of it has gone by, especially in the Midwest," Claudio Oliveira, the head of trading at Castlestone Management LLC in New York, said in a telephone interview. "I do expect grain prices to come off now, and I’d expect the same thing to happen in the orange-juice market."
The Standard & Poor’s GSCI Agriculture Index of eight crops slid 0.3 percent to 351.03 at 3:17 p.m. in New York, after rising 0.6 percent yesterday. The S&P gauge of 24 commodities climbed 0.3 percent. Cattle futures reached $1.37225 a pound, the highest since Chicago trading began in 1964.
Yesterday’s low in Chicago reached a record for the date of minus 16 degrees Fahrenheit, beating the mark of minus 14 set in 1884 and 1988, according to the National Weather Service. As of 8 a.m., it was 4 degrees in New York, breaking a record for the date set in 1896.
Orange juice for March delivery settled 0.2 percent lower at $1.4335 a pound today on ICE Futures U.S in New York. Prices jumped 19 percent last year as the U.S. Department of Agriculture forecast Florida’s crop would shrink to the smallest since 1990 as a crop disease hampers groves. Futures climbed yesterday on concern that cold weather would further reduce supplies.
"The bullet missed them," Mohler of AccuWeather said. "I don’t think this even damaged the vegetable crops, tomatoes and strawberries, which are more susceptible."
While Florida’s weather will be colder than normal through tomorrow, temperatures will stay in the upper 30s Fahrenheit, posing no threat to trees, Kyle Tapley, a meteorologist with MDA Weather Services in Gaithersburg, Maryland, said in a telephone interview. It will warm to the mid-40s by Jan. 9.
Wheat futures dropped 22 percent in Chicago last year, the biggest annual decline since 2008, as the USDA forecast a record global crop.
The weather has slowed "rail and truck operations" in Midwest for Archer-Daniels-Midland Co., the world’s largest corn processor, spokeswoman Jackie Anderson said in an e-mail.
"We expect this situation to be short-term, though, and do not anticipate any significant commercial impacts to our operations," Anderson said.
Temperatures as low as minus 10 degrees Fahrenheit probably caused "little significant damage to wheat crops" from southern Illinois to Ohio overnight, Joel Burgio, senior agricultural meteorologist for DTN/Progressive Farmer, said today in a telephone interview.
"It’s highly unlikely that widespread damage occurred because of the snow cover," Dave Marshall, a farm marketing adviser for Toay Commodity Futures Group LLC in Nashville, Illinois, said by telephone. "Wheat is a hardy plant, and this year’s crop had good growth before entering dormancy to withstand the cold weather better"
About 62 percent of the plants were in good or excellent condition at the end of November, according to the USDA.
Cattle prices climbed 1.8 percent in 2013, the fifth straight annual gain. Beef output in the U.S., the world’s biggest producer, may slump 5.7 percent this year to the lowest since 1993, the USDA has projected.
The extreme cold across the central U.S. is "overall pretty bullish" for cattle futures as animals gain less weight and consumer demand climbs, Lane Broadbent, president of KIS Futures Inc. in Oklahoma City, said today in a telephone interview. In frigid weather, animals "have to use more energy" to stay warm, he said.
Cargill Inc., the second-largest U.S. beef processor, said some of its meat plants are facing lower volume as frigid weather across most of the U.S. hampers transportation.
The company’s pork plants in Ottumwa, Iowa, and Beardstown, Illinois, and its beef plants in Wyalusing, Pennsylvania, and Milwaukee are processing fewer animals, Mike Martin, a spokesman for Minneapolis-based Cargill, said in an e-mail today. The pork plants probably will work on Saturday, Jan. 11, to make up the volume, he said.
Meatpackers processed 217,000 cattle in the first two days of this week, down 5.7 percent from a week earlier and 696,000 hogs, down 13 percent from a week earlier, USDA data show.