Opinion

Record freezing weather puts US bread basket at risk

Bakery & Bread
United States
Sustainability & Environmental Impact
The recent winter storm Uri which has ravaged on Central and Southern US is expected to damage wheat crops and has caused logistical issues for grains headed for domestic and export markets.

The recent winter storm which has swept through Central and Southern parts of the US has brought catastrophic results to the heart of the country’s grain production. Abnormally low temperatures have plagued grains, particularly wheat, which is grown the most in the Great Plains.

Storm Freezes Crops

From mid-February, a massive winter storm became in full force, plummeting Central and Southern parts of the US to prolonged sub-zero temperatures. During this time of the year, winter wheat undergoes a dormant state, where it will emerge again in the spring for harvest. And while it is dormant, plants need snow, especially in the Northern regions, for insulation as temperatures drop. The recent weather conditions, however, have not been forgiving, especially for those crops which were not sufficiently covered with snow. Crop damage for US soft wheat is estimated to be at 10% and hard wheat crop at 15%, according to the Commodity Weather Group. Whether the damage will cause wheat supplies to run low is too early to tell, but considering 70-80% of US wheat production is winter wheat (USDA, 2020), there will certainly be some effect on production.

In addition to crop damage, the weather has been creating logistical disruptions. Rail tracks have been clogged with snow and ice, limiting the number of cars per unit, shortening the journey length, and minimizing freight capacity. Inland water transportation is facing difficulties with the presence of ice, also cutting down the amount of freight able to be carried. The logistical delays will impact US exports, which pertain to not just wheat, but goods such as soybean and corn, which are usually transported to ports in the Pacific Northwest through rail. US wheat futures rallied in response to the expected dent to production, which has since then dropped slightly.

US Wheat Was Already Looking Low

Source: IGC

Even before the storm has hit, US wheat had been looking lower than usual, with forecasts of 23.5 million tons of wheat for ending stock for 2020/21, a drop from 28 million tons in 2019/20 (International Grains Council, 2021). Production followed similar predictions, from 52.6 million tons to 49.7 million tons, a 5.5% decrease.

Australia on the Rise

The slowdown in the movement of goods within the country will affect the US’s exports, given that it is one of the world’s largest exporters of grains. Demand had surged for US grains ever since China had worked to buy up supplies in one part to fulfill the Phase 1 trade deal, but also as the country is rebuilding its decimated hog population from the African Swine Fever (ASF). Compared to the adversity which the US grains are facing, Australia is looking at a bumper wheat crop for the 2020-21 season. Australia is expected to expand its presence after dealing with a slump in production, taking advantage of the shortfalls in production from not only the US but in Europe as well.




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