Wheat appears to be poised for a higher open, potentially a gap higher open. Wheat has 9 lives, or will this be its death?
From a weather perspective, fade the open as weather is a known? Or is the weather too variable to sell ?
The guidance is all 2-4 degrees WARMER with lows the next couple of nights vs late last week.
However, the NWS is going MUCH colder than the guidance and even colder than the guidance of late last week.
Also KE wheat picked over 20c from the lows on Tuesday, which I'm assuming was from this freeze as crop ratings were pretty good and the USDA report was not bullish.
That was the time to buy. As long as the uncertainty of the cold events(which will be at least 2 nights of subfreezing temps-possibly a 3rd in some spots) is ahead and there will be SOME damage, we can go higher still but I'm not a buyer here when the models have turned warmer and we've traded a forecast that was colder already.
Thank you for your weather reply.
Probably a ,higher open. IF like crude, dow and other commodities, may be a fade.
I will watch
I think the KE wheat will open higher.
The other thing is the crude/Dow. If that goes strong in one direction it might have an affect.
As expected, the wheat opened higher and for the KE, it was a gap higher open because we closed on the highs on Thursday.
We'll see if it can hold. If we close the gap, its a gap and crap reversal signal, if not, its a short term upside bullish breakaway gap.
I think temperatures will need to come in colder for it to keep going higher.
We do have 3 nights in a row with this cold in place and it still ahead so that is not going away.
Looks like clouds and snow will keep the temperature from dropping much more from SW Kansas, southward tonight. The NWS has it going down to 20, all the way down to the OK border in the west. Thinking it may not drop much less than 25 there.
This is the midnight temp below.
https://radar.weather.gov/Conus/uppermissvly_loop.php
Go to: Most Recent Image
Wheat may be a good fade by way of sell stopping overnight low. 2cents!
Could be tjc,
The coldest night has passed and it was not as cold in many spots as forecast by the NWS( my forecast had turned less cold, however).
The TX panhandle actually was a tad colder though.
So the main weather bullish ammo is behind us, though tonight will feature another freeze and maybe Tuesday night a light freeze.
Closing the gap higher from last night is also a gap and crap buying exhaustion technical formation. ........usually a good shorting opportunity, as you are recognizing.
We have crop condition reports now on Monday's and they can play a huge role in the way the market trades on Monday/Tuesday.
The forecast for temps tonight and another freezing night is still a wild card on how the wheat might respond. If there was no more cold and this event had passed completely, I would be more bearish but the gap failure last night is a huge negative.
Models are not as cold with the next 2 nights as last night (but close to the previous numbers) but NWS forecasts in some places are actually colder.........the TX panhandle for instance.
Wheat there is more developed and can get hurt more.
There was some damage to the WW crop last night, especially in KS but probably not extreme.
KE wheat got back up to 496 just after midnight on the subfreezing temps but couldn't push over that, then weakened during the early morning hours as the cold event played out more(about as expected).
The regular open saw a huge spike down, with most of the event behind us "buy the rumor sell the fact action"
The coldest temps for KS are over but tonight should be the coldest for TX and will do more damage there as well as another lighter freeze for KS which is not what the already damaged wheat needs.
How much damage was there?
That's a question that only gets answered by monitoring the wheat for a couple of weeks afterward. Winter Wheat is a very hardy crop, so much of it will recover. However, we will have had 3 nights of temps in the 20's in some locations, not just 1 and the locations have moved around.
In many freezes, a big determining factor is the length of time that temps were below the damage threshold or below freezing. If it's less than 4 hours, the wheat often comes out pretty good.
In this instance, the duration of sub freezing temps was unusually long, so one would expect more damage from that element......time below the damage threshold.
We may be hearing reports later this week from that area. It's likely that the crop report next Monday will show a drop in the WW rating for KS/OK/TX and then of course the following week. It might not be that great when seen from the national crop perspective.........maybe just a few % increase in the p/vp?
However, permanent damage may not show up that quickly. Damaged wheat can produce new tillers and the main stem can be completely lost with new tillers compensating for some to most of the damage. How this plays out will not be known for a long time
In the devastating 2007 freeze, I think the main stem was lost from sustained cold over 3-4 days but additional tillers developed or at least survived the freeze and it was speculated, because this was WHEAT, the invincible crop that can't be killed, that those tillers would make up for it. Nope. Too much damage and not enough energy or plant tissue left to bring the plant back to a state which compensated enough, for in many cases worth harvesting.
Tillers that developed after the freeze didn't produce squat.
By metmike - April 14, 2020, 9:34 p.m.
Here a site that provides current temperatures.......clearly, tonight is not going to be as cold as the last 2 nights, even in TX, unless the bottom falls out with calm winds and clear skies.....looks unlikely.
Joe Baumgardner@BaumgardnerJoe
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This should be interesting. Don’t remember ever having snow on headed wheat.
