Issue 237 July 9, 2015 Welcome to this week s WeatherManager, your weekly journal for ideas and developments in the weather risk market, brought to you by eweatherrisk. The articles talk about the volatile weather with too much rain in most of the Belt and dry and hot weather in the West reinforcing themselves. The developing El Nino suggests wetter and cooler conditions in the Southern Plains and South and dry and warm conditions out West along with drought in the Northern Plains into Canada. If this El Nino turns out to be strong, the likelihood of a quicker transition to a La Nina and difficult growing conditions increases for the 2016 growing season. Recommendation. With the developing El Nino and late and even prevented planted crops, focus is on continued wetness and lack of growing degree days where crops were planted late and heat in the Northern Plains, in Canada and out West. Consider the caveat about the flip to a La Nina and buy heat and/or drought hedges for 2016 this Fall and not wait until the forecasts tilt that way and prices increase for next summer in the Belt to protect against 2012 conditions. Cornfield South of Grand Tower, IL Wednesday July 1, 2015 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
Current Headlines Percent of Normal Precipitation (%) 7/8/2014 7/7/2015 Percent of Normal Precipitation (%) 7/8/2012 7/7/2015 Standing water threatens crops in western Wis. HAMMOND, Wis. "We knew rain was coming, but I didn't expect this," said Kurt Afdahl, who farms a lot of land northeast of River Falls. Summer storm hurts eastern ND crops What s clear now, however, is that wheat which had been the area s best-looking crop this growing season appears to have been hit the hardest by the June 27 storms. Weather Impacting Final Acreage Numbers Weather is having a greater than usual impact on what farmers across the U.S. actually planted compared to what they intended to plant this spring. Rain Stunts Crop Growth Southern Research and Outreach Center Scientist Tom Hoverstad said, "We'll see some restricted root growth and corn will stand still for a while until that water drains out and can resume normal growth so it'll impact crops where we got too much rain." Wet weather causing problems for farmers Southern Illinois wheat farmers are behind on harvesting, and, with the continuing rainfall, the quality of the crop is losing value each day. Alle-Kiski farmers: Crops weather heavy rain Local farmers say the above-average rainfall in June hasn't hurt their crops, but it has stunted efforts to put in mid-season planting and make hay. Just about every plague possible affected this year's wheat crop Knapp, with Kansas State University, said this year s wheat crop weathered drought, freeze, temperature swings, heavy rain and disease making above-projected yields in some areas of the state a slight shocker for farmers and analysts alike. Heat wave hastens crops, stresses scarce water resources RED BLUFF, Calif. A heat wave that s causing crops to develop quickly and putting more pressure on scarce water resources could last through the summer, forecasters say.
Current Drought Update Commentary: The upper map is the US Drought Monitor Class Change from April 7 to June 30 th. As we have discussed for weeks, record rainfall in the last 90 days has led to as much as 5 class improvements in the Southern Plains and widespread 1 and 2 class improvements in the Rockies, Plains, Upper Midwest, New England and along the Gulf. Degradations were most pronounced in the PNW and into Canada. The lower map is the Drought Monitor from last Thursday. A strong ridge over the west and a deep trough over the east produced record high temperatures over much of the west, with many locations reaching the 110 degree range. The heat along with very dry conditions over the last 30 days has elevated the fire risk over much of the west as we ve suggested all year. From the Midwest into New England, several storms tracked through the region with 5 inches of rain in areas of the Midwest with cooler than normal temperatures. Recommendation: Drought and heat hedges should be evaluated for all of the West. Heat and drought hedges in the Upper Plains and Canada this summer and cool and wet hedges in the South for cotton and milo are recommended where this cycle can be expected to repeat. A hot summer for the West can be hedged for impacts on livestock and dairy as well as energy consumption for building owners, municipalities and schools where the drought is the worst and the fire and heat season started early and will likely continue.
Significant Events From June 2015 Commentary: The map is the significant weather events for June. Alaska and the West continue to see record heat and drought and the Midwest seeing record rainfall and then drought and heat in the Southeast. Recommendation: Drought hedges in the West for next winter and heat hedges for this summer where the dry conditions produce excess heat and the record setting heat in the PNW delivered as we suggested and looks to continue. Drought and heat in the Northern Plains and Canada where the developing El Nino should produce drier condition in the North and wetter conditions in the South. Lack of growing degree days for late planted cotton throughout the South are still recommended and should be considered for northern corn and soybeans as well and any areas with late planting or excess rain can start considering freeze hedges for this Fall with insufficient GDD s.
Hazards Outlook Commentary: The map is the 3-7 Day weather hazards map for the US. Flooding is still widespread in the Midwest and Plains after the record setting June rainfall with more heavy rain forecast in the Midwest with widespread flooding from the Plains into the MS and IL river valleys. Excess heat in the Southeast and widespread drought in the West. Recommendation: Drought hedges in the West for next winter and lack of chilling units for the West should be considered. Excess heat hedges for the Southeast should be considered for August through September where these conditions could continue. Excess rain hedges and lack of Growing Degrees should be considered for areas that have had too much rain and the pattern can be expected to continue and/or repeat.
Short Term Precipitation Outlook Commentary: The 5 and 7 day outlooks forecasts a wet pattern for a good portion of the US even from the Sierra s and then again the Rockies and Southwest with the monsoons firing up and continued heavy rain in the Corn Belt. Dry in the Southwest, PNW and Texas and only light rain in the Northern Plains and Southeast. Soybeans need sunshine and these continued rains will result in more prevented planting and worsen conditions for corn and beans and make for a difficult and toxic wheat harvest. 7/8/2015 7/13/2015 7/8/2015 7/15/2015 Recommendations. Drought and heat hedges for the PNW and Canada for this summer and next fall/winter and heat hedges for this summer where the recent rains are way too little and late in the West and PNW are still suggested. We have hurricane and excess rain hedges for those along the coasts that are also of interest to energy companies in the Gulf where the El Nino has less impact on Tropical Storms. Municipalities and building owners should consider purchasing excess snow hedges for next winter now instead of waiting for the rush and crowded pricing and remember we now offer weather protection for your concerts, fairs, tournaments and other outdoor events.
6 10 Day Weather Information Commentary: Wednesday s 6 10 day temperature outlook for July 14 th July 18 th shows widespread above to much above normal temperatures for most of the US except below normal in the 4 Corners and New England. Above to much above in the Northern Plains and the Southeast and normal around the Great Lakes. The lower map is the 6-10 precipitation outlook with above normal rainfall forecast along the Canadian border and the eastern third of the US with the most above normals in the Northern Plains and ECB. Below normal finally return to the Southern Plains and then along the West Coast. Recommendations. Increased risk for a cold and wet summer particularly in the Eastern Corn Belt continue and can be hedged for both growers and Utilities in the Eastern Belt along the Great Lakes which never warmed up last summer. Heat and drought hedges in the Western Belt and the PNW into Canada should be considered for row crops as well as for feedlots and dairy with our new heat index hedges. Lack of Growing Degree Days for southern cotton which likes a hot summer and with the El Nino increasing the risk of a cooler and wetter summer in the South as well as more frequent snow and ice events in the South/Southeast. Call for a quote for your risk.
8 14 Day Weather Information Commentary: The 8 14 day temperature outlook for July 16 th to July 22 nd forecasts above to much above normal temperatures for much of the US with the most aboves still in the Northern Plains and the Southeast with pockets of below normal still in the 4 Corners, finally the PNW and then again in New England. Recommendation. Low GDD hedges for late planted cotton in the South and heat and/or drought hedges in the Northern Plains, Canada and the PNW are still recommended where contracts can start 20 days forward and after this forecast period to protect against a return to recent conditions. Heat hedges in the West where a very active fire season can be expected and worsening every day with these strong above normal conditions. Call or e-mail 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 and Northern Belt and snow and cold winter hedges there for next winter.
8 14 Day Weather Information Commentary: The 8 14 day precipitation outlook for July 16 th to July 22 nd shows above normal precipitation finally along the Alaska Coast and into the PNW, along the Canadian border and into the Eastern third of the US with the most above normal horseshoeing around the below normal in the Southern Plains and more problems for the Eastern Belt. Recommendation: Cool summer and excess precipitation are recommended particularly for shorter season areas like MI/WI as well as for any late planted areas where folks are still trying to plant soybeans this late in July and early freeze dates not far away. Freeze hedges for those areas should also be explored as well as continued wetness for quality problems and excess drying costs. Rain on hay should also be considered where we have some special protections that can be bought 20 days in advance of your cutting window.
Issue 237 July 9, 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) 603-3605. Brian O Hearne, President/CEO Brian.Ohearne@eweatherrisk.com John Coleman, Director, Structuring & Origination John.Coleman@eweatherrisk.com Support@eweatherrisk.com San Bernardino National Forest Fire June 19, 2015 eweatherrisk, Inc. 5251 W. 116 th Pl, Suite 204 Leawood, KS 66211 (800) 603-3605