WeatherManager Weekly

Transcription

1 Issue 222 March 26, 2015 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 expanding drought particularly in the Northern Plains and spreading into the Great Lakes, being too wet down south as well as the warm up west of the Mississippi stressing crops and breaking dormancy early. Drought hedges for pasture and winter wheat join the focus along with late freeze protection. Recommendation. Focus needs to be on protecting crops from a late spring freeze with increasingly variable weather as well as drought hedges for pasture and winter wheat. In a good part of the wheat belt the latest late Spring freeze happened in 2013 or 2014 and could happen again. The third 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. Finally, Energy and Water Utilities in the Midwest and down the Mississippi and East should consider 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 Percent of Normal Precipitation (%) 3/25/2014 3/24/2015 Percent of Normal Precipitation (%) 3/25/2012 3/24/2015 Current Headlines Rains help southern US wheat, but halt corn sowings Rainfall in the southern US refreshed dryness-hit winter wheat crops, but has hampered early progress on spring plantings and fieldwork and reportedly left parts of Mississippi at their wettest since at least the 1980s. Central Texas: Farmers Having Tough Time Planting Crops Bad weather has made it difficult for Central Texas farmers to plant crops, but they may be getting help. Crop conditions: South Texas agriculture under serious weather threat For the second year in a row, cold wet weather is hampering the Lower Rio Grande Valley s billion dollar agricultural industry, only this year the prolonged conditions are posing a much more serious threat, according to Texas A&M AgriLife Extension Service experts. Dry winter rolls into spring - 'It's going to get worse SDSU Extension Climate Field Specialist Laura Edwards said that longterm forecasts from the Climate Projection Center issued Thursday indicate South Dakota's dry conditions are not going to improve any time soon, though. Abnormal planting seasons might be the new norm in Upper Midwest ag What s clear, though, is that early signals point to a potential repeat of 2012, arguably our earliest spring season ever, says Mark Seeley, Minnesota Extension climatologist. Outlook indicates dry conditions, drought in Northern Plains to continue into growing season Drought conditions are likely for a good chunk of the Northern Plains this spring because this winter was relatively dry, and farmers gearing up for spring planting are keeping an eye on the sky. Drought creeping into Great Lakes states "Drought development is more likely in parts of the northern Plains, upper Mississippi Valley and western Great Lakes, where recent dryness and an outlook of favored below-average precipitation exist," NOAA said in its spring outlook.

3 Current Drought Update Commentary: The upper map is the Drought Outlook from now to the end of June. The big development areas are forecast in the PNW and the Upper Plains along with Intensification in the West, all of Minnesota and parts of the Dakotas and Wisconsin after a very dry winter that the articles suggest could expand to the Great Lakes and even into Ohio. Drought creeping into Great Lakes states Improvement forecast for pieces along the Gulf and in the southern Plains of KS, OK, TX and NM but intensification in parts of KS, OK and TX. Several cities in California just had their driest 26 months in recorded history. The lower map is the Drought Monitor as of March 17 which saw a fairly dry week and deterioration in most of the Plains, PNW and Southwest but a system brought 2-5 of rain across the south and eastern part of the US leading to planting problems discussed in the articles. Temp s were also above to much above normal except from the Great Lakes and east. Recommendation: Drought hedges should be evaluated for all of the West for pasture, rangeland and winter wheat in the Central and Southern Plains. Freeze hedges this Spring for wheat, nuts and fruit trees in the Plains where we will likely break dormancy early with plenty of winter left, remember the correlation with dry conditions and low overnight lows as well as the recurring polar air incursions with the wheat breaking dormancy and also to hedge early planting freeze risk.

4 Hazards Outlook Commentary: The upper map is the 3-7 Day weather hazards map for the US with one I haven t seen before Flooding Occurring/Imminent along the Midwest rivers, Much Below Normal Temps in the TN Valley and South, High Winds in the North and of course Severe Drought in the Plains and West. Recommendation: Drought hedges in the West, drought and a late spring freeze in the Plains for winter wheat where Kansas and Oklahoma and even parts of Nebraska getting into the 90 s in March and 80 s last weekend. 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 Short Term Precipitation Outlook Commentary: The 5 and 7 day outlooks forecasts more rain in the PNW, light snow in the Rockies and moderate rain from OK to IN right along the Ohio with wet eastern belt wheat and possibly difficult planting conditions on eastern belt corn. Very little rain in the Plains or in the Southwest and California and West TX and the Plains may be able to start planting. 3/25/2015 3/30/2015 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 next fall/winter and heat hedges for this summer. Freeze hedges on winter wheat, fruit and nut trees should be considered in the Midwest and the West where most of March looks much above normal temperatures and 2013 and 2014 setting record late spring freeze dates. 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. 3/25/2015 4/1/2015

6 6 10 Day Weather Information Commentary: Tuesday s 6 10 day temperature outlook for March 31 st April 4 th shows the cold retreating into the Great Lakes and New England and a massive warm up from SoCal through the Southwest with the most aboves but most of the US above normal for this time of year. The lower map is the 6-10 precipitation outlook with above to much above normal conditions for Montana, ND and east of the Great Lakes into the lower Mississippi. Wet in the Eastern Corn Belt which will exacerbate the flooding and wet planting conditions. Below normal still in the Plains west with the most below normal in California. Recommendations. Growers and commercial accounts in the West should consider hedges for a lack of chilling units for next winter with California into Oregon setting heat records and possible climate change. 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 Eastern Belt, particularly near the Great Lakes with what could be record ice coverage and massive snow cover and heat risk with the drought in the Western Belt and drought and heat hedges in the Plains into the Dakotas and MN with the drought intensifying in the Drought Outlook.

7 8 14 Day Weather Information Commentary: The 8 14 day temperature outlook for April 2 nd to 8 th forecasts above to much above normal temperatures continuing to rage across the Southern half of the US and much below normal still in the Great Lakes and now extending west into Montana and east into New England. 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 in the Eastern Belt and with the 2012/2015 drought comparison, heat hedges for the Western Belt and Texas to Minnesota and the Dakotas.

8 8 14 Day Weather Information Commentary: The 8 14 day precipitation outlook for April 2 nd to 8 th shows above normal rainfall along the Canadian border and the most above normal in the Ohio Valley and then in New England to add even more snow to the record books with the forecasted cold temperatures. Below normal for the Western Plains all the way to the PNW with a virtual end to the Western rainy season absent a late April storm. Recommendation. Freeze hedges in the Wheat Belt are our Number 1 recommendation where large parts of KS, OK and TX set latest late freeze date 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 Spring that can be protected as well as hot summer risk in the Northern Plains following on the heels of the drought.

9 Issue 222 March 26, 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 eweatherrisk, Inc W. 116 th Pl, Suite 204 Leawood, KS (800)