Cold conditions in US damage wheat crops

Wheat crops in parts of the US have been damaged by freezing conditions, according to a new report, which also predicts a longer than anticipated La Nina. Here’s what it means for prices.

Wheat watch: Rabobank says the longer than expected La Nina could lead to higher CBOT prices. PICTURE: ZOE PHILLIPS

FREEZING  temperatures in the US paired with a strengthening La Nina could result in damage to winter wheat in areas of the country, potentially pushing global wheat prices up.

That warning is contained in Rabobank’s Agri Commodity Markets February report, which indicated there has probably been some permanent damage to winter wheat in areas in the US where snow cover was thin.

“This month saw freezing temperatures all over the US Great Plains as low as -29 degrees in Kansas,” Raboank said.

And with the threat of La Nina continuing longer than expected and potentially worsening in June, Rabobank said US wheat production might show a greater year-on-year decline in 2021-22 than previously estimated.

Rabobank said the longer than expected La Nina could lead to higher CBOT prices, as this was typically associated with drier-than-normal weather in the southern US and cental plains.

“Historically, La Nina has coincided with an average -2.8 per cent reduction in US production,” the report said.

Looking ahead, Rabobank said the market would be sensitive to any potential further downgrade to crops currently growing, especially in the US and Europe.

“But if these crops develop well, we might see some price downside as they come in,” the report said.

Meanwhile for Australian production, the bank expects volumes to once again do well after a record year in 2020-21, if global weather patterns continue.

“With high export prices, good rainfall in recent months, and global weather patterns expected to continue for at least the next quarter and potentially longer, Australian wheat production will likely maintain near record levels in 2021-22,” Rabobank said.

Late last week, CBOT wheat future prices fell sharply, a Commonwealth Bank market report showed.

On Friday, CBOT May 2021 prices were at US660 cents a bushel, in comparison with US686 cents a bushel last Wednesday.

“Wheat prices caught the downdraft in grains and oilseeds, but not the recovery later in the day,” report author Tobin Gorey said.

“The market could not quite retain the 2020 season highs or near‑highs of Wednesday.”

For ASX east wheat futures, “little changed” on Friday.

Late last week ASX east May 2021 prices reached $300 a tonne. That compares with $303 a tonne at about the same time last week.

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