WeatherManager Weekly

Transcription

1 Issue 220 March 12, 2015 Damaged wheat from April Freeze (Runnels County, TX 4/22/2014) Welcome to this week s WeatherManager, your weekly journal for ideas and developments in the weather risk market, brought to you by eweatherrisk. Articles talk about the continuing drought and the warm up this spring stressing crops and breaking dormancy early. Late freeze protection is this week s theme. We have suggested for 3 weeks now that plains crops will break dormancy early and can attest to that with wheat roaring from Texas into Kansas and fruit and nut trees likely to bud and bloom early. Recommendation. Focus needs to be on protecting crops from a late spring freeze with increasingly variable weather, a big warm up in the 6-10, a big cool off in the 8-14, more warmth after that and with the 20 day cycles, a greater risk of a cold snap in Mid to late April. In a good part of the wheat belt the latest late Spring freeze happened in 2013 or 2014 and could happen again. The second focus should be on protecting against prevented planting this Spring where there is big snow cover and great amounts of ice in the Great Lakes is a big concern. The third focus is Energy and Water Utilities in the Midwest buying cool and wet summer hedges. Call for quotes (800) Weather hedging is a necessary part of any risk management strategy as weather poses the biggest danger to crop yields and revenue, and a hedge can provide great protection to complement your crop insurance and marketing decisions as well as protect many commercial risks.

2 Current Headlines Percent of Normal Precipitation (%) 3/11/2014 3/10/2015 Percent of Normal Precipitation (%) 3/11/2012 3/10/2015 More extreme weather could mean less wheat for Kansas "What concerns (Vara) Prasad, director of K-State s Sustainable Intensification Innovation Lab, is the increased possibility of higher temperatures during this final stage (kernel filling stage). Focus on yield stressors to maximize return on crops Weather causes more stress on crop yields than any other factor, he (Mark Licht) says. It s also a factor in how serious all the other stressors are, because it influences every other stress, including fertility, weed competition, insect problems and diseases. Nice Weather Could Mean Early Crop Start "4 inches soil temperatures in the single digits, 6-7 F...that's remarkably cold and alfalfa does have a hard time with some of those. Combine that with now it's going to break dormancy with this warm weather, if we get bad conditions following this warm stretch that could be difficult for alfalfa to deal with." (Tom Hoverstad) Texas Fruit Farmers Explain How Extreme Temperatures Are Killing Their Crops Stone fruits planted for early harvests have already been affected, while subsequent cold snaps could impact remaining crops. Dry cycle continuing across much of the Southwest Lest recent precipitation, frozen and otherwise, lull Southwest farmers and ranchers into some kind of sense of drought relief, Al Sutherland, coordinator for the Oklahoma Mesonet ag program, reminds them that things can go south in a hurry. Area rivers, creeks run the risk of ice jams, flooding as the midstate warms The warm-up poses "a big risk" while large sheets of ice remain on the river and on area creeks, said Paul Head, a meteorologist with the National Weather Service in State College. Seed business reacts to water shortages Those empty fields mean reduced sales and shifts in demand for companies that supply seed for crops such as rice, cotton and vegetables.

3 Current Drought Update Commentary: The upper map is the one year Drought Monitor class change. One to two class degradations in the Sierra s, Oregon, Eastern Utah and Western CO, North TX, the Upper Plains, the Gulf Coast and TN Valley and one or two class improvements in TX, and the Central and Western Corn Belt. The lower map is the Drought Monitor as of March 3rd. The week saw an active pattern nationwide as a series of storms delivered much-needed rain and mountain snow to portions of the Southwest and a wintery mix of freezing rain and snow to the lower Midwest, Mid-Atlantic, and the Southern Tier from Texas to Georgia. East of the Rockies saw much below normal temperatures on the order of 20 below normal making February one of the coldest in decades or ever in some locations. Recommendation: Drought hedges should be evaluated for all of the West as well as hot spring and summer risk. Freeze hedges this Spring for wheat, nuts and fruit trees in the Plains where 2 weeks ago suggested would break dormancy early. We visited with Commercial and grower wheat accounts this week and are placing very attractive freeze hedges. Remember the correlation with dry conditions and low overnight lows as well as the recurring polar air incursions with the wheat breaking dormancy and even if you are wet now, the short term wheat precip forecast is hot and dry.

4 Hazards Outlook Commentary: The upper map is the 3-7 Day weather hazards map for the US with flooding likely in parts of the Corn Belt and through the Tennessee Valley. Heavy Rain also likely in the Eastern Corn and Wheat Belt through the Mid-Atlantic. Drought remains in the Plains and West. Recommendation: Drought and freeze hedges in the West, drought and winterkill in the Plains for winter wheat where Kansas and Oklahoma are approaching 80 most of this week and then another shot of cold at the back of the 8-14 day and remember the pattern for weather to repeat in 20 day cycles setting up a possible mid April Freeze. Cold summer hedges for utilities are recommended for the Midwest where a good part of the Central and Eastern Corn Belt is in a very cool 24 month period and heat hedges for the spring and summer in the West.

5 Significant Events of February 2015 Commentary: The upper map is the Significant Climate events for February and Winter 2015 with a great verification of our winter call warm and dry in the West and cold and wet in the East with numerous snow records and winter snow and ice storms. Recommendation: Drought and freeze hedges in the West, drought and late Spring freeze in the Plains for winter wheat and fruit and nut trees with a very warm 6-10 day forecast and increased late spring freeze chances. We keep learning new weather predictions, this week that February thunderstorms bring April freezes and a good part of the Southern Plains had 2 February thunderstorms. Freeze hedges can be had for as low as a 12% rate, in some cases even slightly lower.

6 Short Term Precipitation Outlook Commentary: The 5 and 7 day outlooks forecasts lingering snow in the Rockies, new rains in the PNW and big rains in the Mississippi Valley into Ohio. Very little rain in the Plains or in the Southwest and California. 3/12/2015 3/17/2015 Recommendations. Southern California and Nevada continue to miss out on their rainy/snow season where they are much below normal for this time of year and reflects continuation of the drought. Drought hedges for March to May are suggested for the West. Freeze hedges on winter wheat, fruit and nut trees should be considered in the Midwest where most of March looks much above normal temperatures and 2013 and 2014 setting record late spring freeze dates. Snow and cold winter hedges in the Midwest and East are already close to or in the money with 2 months of winter left. Municipalities and building owners should consider purchasing excess snow hedges for next winter now instead of waiting for the rush and crowded pricing and can buy hot summer hedges for air conditioning load. 3/12/2015 3/19/2015

7 6 10 Day Weather Information Commentary: Tuesday s 6 10 day temperature outlook for March 17 th 21 st shows a huge warm up with the most above normal in the West stretching into the Western Plains. Much below normal radiates from snow-packed New England and below normal covers the Eastern 2/3rds of the US all the way to the Gulf Coast. The lower map is the 6-10 precipitation outlook with above to much above normal conditions from the Central and Southern Plains into the Great Basin and the Southwest. Below normal on the West Coast and Eastern half of the US. Recommendations. Growers and commercial accounts in the West should consider hedges for a lack of chilling units with California into Oregon setting heat records and possible climate change risks where chilling units for next winter can be purchased. Increased risk for a cold and wet spring in the Corn Belt can be hedged where we have hundreds of standard hedges uploaded to our map pricing showing coverages and costs for protecting against prevented planting in the Belt this spring and another cold summer for both growers and Utilities in the Midwest, particularly near the Great Lakes with what could be record ice coverage and massive snow cover.

8 8 14 Day Weather Information Commentary: The 8 14 day temperature outlook for March 18 th to 24 th forecasts above to much above normal temperatures continuing to rage with the most above normal in the West and spreading to the Rockies and Western Plains. Much Below normal dominate from New England into the Corn Belt and TN Valley and below normal to the Western Plains. Recommendation. Cold spring hedges East of the Rockies and heat hedges in the West should be considered. Construction and Retail industries can protect against cold and snow days this Spring as well as for next Winter. Call or us to discuss how these work for your risks. We are also seeing interest from Utilities as well as growers to protect against another cold summer east of the Rockies and excess rain hedges for Coops as well as Water Utilities that are hurt by dry or wet summers.

9 8 14 Day Weather Information Commentary: The 8 14 day precipitation outlook for March 18 th to 24 th shows above normal rainfall still in the Southwest and Western Plains which will make for a great wheat crop whose risk will then be almost entirely of a late spring freeze. Below normal from the PNW through all of the Canadian border and into the Corn Belt which will worsen the drought in the Upper Plains. Recommendation. Freeze hedges in the Wheat Belt are our Number 1 recommendation where large parts of KS, OK and TX that the late freeze date records were set in 2013 and 2014 possibly setting a trend. After multiple wet springs and delayed planting, we are quoting protection for excess rainfall at planting this spring in the upper Midwest as well as the Eastern Belt for both corn and beans at planting and wheat for blight and toxin. Construction interests in the Southeast may also see extra expense and reduced revenue with a colder and wetter than normal winter into Spring that can be protected.

10 Issue 220 March 12, 2015 Points to Consider There are now over 6,000 weather stations that are available, single or in combination to cover weather risk in 14 different peril groups. Weather risks are fully customized to each customer s need as a single peril that can be applied throughout the season as well as for commercial accounts cooperatives, ethanol plants, feedlots, utilities (both water and energy) and construction risks. Patented weather data, hedging and index creation processes, patent number 8,607,154, issued 12/10/2013. eweatherrisk solutions are backed by a Standard and Poor's AA- rated multi-national reinsurer. Contact us or your agent for specific needs (800) Brian O Hearne, President/CEO Brian.Ohearne@eweatherrisk.com John Coleman, Director, Structuring & Origination John.Coleman@eweatherrisk.com Clint Kripki, Head of Commercial Sales clint.kripki@eweatherrisk.com Rice County MN 4/28/2014 eweatherrisk, Inc W. 116 th Pl, Suite 204 Leawood, KS (800)