Will Flooding, Cold Snap Affect Winter Wheat Crop? (VIDEO)

January 20, 2016 05:00 AM

The heavy precipitation in late December and early January that caused flooding along the lower Mississippi and the Ohio River valleys, Texas and Oklahoma is causing some to wonder about the winter wheat crop.

They are concerned that all that water could have damaged the winter wheat crop, particularly in fields that had not yet entered dormancy.

But just how much damage—if any—occurred won’t be known until spring, when the crop comes out of dormancy. And this winter’s heavy moisture could ultimately prove beneficial to the winter wheat crop, according to analysts.

That all bears watching, given the discovery of lower than expected winter wheat acreage this year.

Last week, in its World Agricultural Supply and Demand Estimates, USDA cut its estimate of winter wheat seedings by 2.7 million acres, a 7% drop, due to both delayed planting last fall and low prices that encouraged producers to shift acreage into other small grains such as barley and sorghum or back into cotton, said Rich Nelson, analyst with Allendale, a brokerage firm in McHenry, Ill.

Does this mean wheat prices are due for a rally? Unfortunately for producers, probably not. Nelson calculates that even if 5% of the soft red winter wheat area were damaged, there would not be enough of a reduction in the crop to provide a meaningful price rally.

“The supply and demand situation for wheat in the United States is improving enough to stabilize prices, but not enough to give a rally yet,” said Nelson. “It will be two years before wheat has a meaningful rally on its own accord.”

With most of the flooding now dissipated, talk has turned to the lack of snow cover across the Southern Plains—the nation’s hard red winter wheat belt—causing concern that winterkill damage could be high this year for hard red winter wheat.

Watch the AgDay story here about the recent cold snap and its effects on the wheat crop:

The March soft red winter wheat contract on the Chicago Board of Trade was trading 15 cents to 20 cents off its recent contract lows early this week.

“When you look at the wheat market, it has certainly been pounded down—just like row crops have—and it is now searching for a bottom,” said Bryan Strommen, market analyst with Progressive Ag, a brokerage firm in Fargo, N.D.

While potential damage to the winter wheat crop caused by recent flooding and winterkill could ultimately help boost or at least support U.S. winter wheat prices, world wheat reserves, in general, are a record 232 million metric tons, up 9% from last year’s record high.

Several countries, however, continue to have issues with winter wheat, particularly Russia, Ukraine, and Australia, where dryness has been a problem.

“The crop in Russia and Ukraine is in dormancy, like ours, and a lot will come into play when it comes out of dormancy this spring,” said Strommen. “It didn’t go into dormancy in great condition.”

What’s happening in your winter wheat fields? Let us know in the comments. 

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