Long Lost Weather Markets

 

Winter weather has done more than usher in the heavy coats, wreak havoc on travel, and delight some kids with Snow Days. Weather was the first real piece of fundamental news of the year for food commodity markets: From the Grain Belt to the Sunshine State, weather factors contributed to strength in commodity futures.

 

This season’s corn harvest has been one of the tardiest on record. In fact, the 2009/10 harvest was so far behind schedule that USDA had to release its Crop Production report for two additional weeks. With 1 to 2 percent of the nation’s corn yet to be harvested, strong winds and cold temperatures could lead to stalk lodging, further contracting yields and delaying harvest of the remaining crop until spring. Production is currently estimated at 13.151 billion bushels, but harvested acreage and yield projections may decline in later World Agricultural Supply and Demand Estimates reports.

 

What once seemed to be a perpetually bearish wheat market found strength in late plantings, a direct result of the late corn harvest. March wheat futures in Chicago gained $0.11 per bushel and Minneapolis futures increased $0.14 per bushel for the week of January 4, 2010. Although world ending stocks for 2009/10 are significant at 166.42 million metric tons, bullish fundamental news combined with renewed speculative interest in wheat supported futures.

 

Bitterly cold weather in unexpected places lifted FCOJ futures and added support to already strong #16 sugar futures. Nearby FCOJ futures jumped $17.60 cents per pound solid—13 percent—in a week due to frost concerns as far south as Lake County, Florida. Even before recent freezing temperatures, Florida orange production was projected at 135 million boxes, down 17 percent from last year. Most in danger are Valencia oranges, as the crop is still developing. The industry awaits assessments on crop damage sustained over the past couple weeks.

 

Frost was also present in southern Texas and Louisiana, the two major sugarcane-producing regions along with Florida. Most of the 2009/10 crop is harvested, but the lingering sugarcane stalks are susceptible to damage that could affect next year’s crop. Global sugar deficits are expected in 2009/10 due to lower production worldwide.

 

We will monitor the weather situation carefully, so please email us or call (510) 832-2866 for additional information.