Fatal state of wheat crop in the US is a good signal for prices Weather plunged wheat crop in the United States. Very good start to the season with a recognizably high level of quality crops of winter wheat aroused fears of further increasing the oversupply in the US market and globally. At this point, however, the situation begins to deteriorate, which has a positive effect on prices.
The potential impact of weather on crops of wheat we reported back in November, when the situation began to change radically. A year earlier a similar period, the share of wheat, which was in good or excellent condition amounted to more than 60%, and in many states it was even close to 80%. In this case, in most states share crop in good very good condition and often the thread is less than 50% and as high as 40%. For all the US share is nearly 55%.
On the strong decline in the quality of wheat contributed to the low temperatures, frosts and, above all, ongoing drought, which may be the result of the weather phenomenon La Nina. If this phenomenon to gain momentum, we can experience the dynamic rebound in raw material prices. Winter wheat needs known. hardening process, which is a slow fall in temperature, preferably under the snow. In the case of sudden temperature jumps, the drought and the lack of snow cover is often damage to the crop.
The decrease in the quality of wheat crops may provide the grounds to break up the prices of the last consolidation. Source: Bloomberg, XTB
The price of wheat is still in a fairly narrow consolidation between the level of 400 and 440 cents per bushel. Further worse prospects for the harvest in the US, and what is more, the possibility of introducing a zero export tax on goods from the US may cause a rise in raw material prices in the coming months.
The price of wheat is in consolidation.
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