Issue 242 August 13, 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 early in most of the Midwest and into Texas and then devastating heat and drought on row crops as well as peanuts where some had been calling for a cool summer. This summer s heat indices have been very high and our livestock heat index protection a real winner. Ask about that for next year. Normally 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 for this Fall and Winter and a difficult 2016 growing season. Recommendation. With late planted crops, focus is on continued wetness as well as early freeze and lack of growing degree days where crops were planted late or are behind from the cool summer. 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 as well as lost energy, snow removal and salt sales this winter. Corn crop decimated by drought Cantón, VA (8/5/2015) 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 (%) 8/12/2014 8/13/2015 Percent of Normal Precipitation (%) 8/12/2012 8/13/2015 Dirt Like Concrete Choking U.S. Corn as Dry Spell Damaging Crops It s almost like concrete out there, said Pitstick, 30, a fourth-generation farmer who grows corn and soybeans on about 8,000 acres (3,237 hectares) near Maple Park. If we don t get any rains in the next 10 days, we re looking at 15 to 25 percent total crop loss. Despite unfavorable weather, are any of the crops persevering? Things have really changed over the last few months, things have gone from too wet and we couldn t get in the field and now for the last 4 or 5 weeks we have been on the dry side, said Burbrink. Angelina County farmers suffer after extreme weather changes Angelina County and several East Texas counties voted to enact a burn ban for the next 90 days in Tuesday's Commissioner's court meeting. It's a complete 360 from the disaster declaration of a little over a month ago. High Plains cotton still late but catching up some with hot weather Cotton in the Texas South Plains and Rolling Plains typically remained two to four weeks behind in development, but current weather patterns are helping, said cotton agronomists. Hot weather affecting crops in Bulloch Co. Peanut plants in Greg Sikes' fields need another month to grow this year. They'd normally be ready by this time of the year. Too much rain ruined farmer's late season crops, could effect local economy While water is necessary for all living and growing things, for Vernon County farmers this growing season, water could provide too much of a good thing. For First Time in 110 Years, Firefighting Costs Exceed 50 Percent of U.S. Forest Service Budget Fighting fires in drought-stricken California and across the West Coast has become more and more costly, according to a new report by the U.S. Forest Service.
Current Drought Update Commentary: The upper map is the 3 month US Drought Monitor Class Change. The Pacific Northwest continues to worsen with the hot and dry conditions from Spring into late July. Improvements continue in the Rockies and Mid Atlantic into New England. The Southeast worsened in the face of very hot temperatures with dryness developing along the Gulf into East Texas. The lower map is the Drought Monitor as of last Thursday. Moderate to exceptional drought maintained its hold on the West with extreme drought in the Pacific Northwest. Hot and dry conditions expanded the areas of dryness and moderate drought to the Southeast, East TX and LA and even into WI, MN, Northern Iowa and parts of the Plains. Recommendation: Drought and heat hedges should be evaluated for all of the West as well as in the Southeast. Heat and drought hedges in the Western Plains and Canada this Fall and even next spring. A hot end to summer and fall 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 continues to worsen as we ve called for all year. For First Time in 110 Years, Firefighting Costs Exceed 50 Percent of U.S. Forest Service Budget
Significant Events July 2015 Commentary: The map is the Significant Climate Events for July with the prime story being hot in the West and into Alaska with ideal wildfire conditions, cold in the Northeast, wet in the Midwest and hot and dry in the Southeast. Recommendation: Now that we are in August, early Fall freeze hedges should be considered where freeze dates for the Northern US can be as early as mid-august and most of the Belt has early freeze dates in early September. With eweather you can guarantee a freeze free September in a good part of the Belt where the forecasts are calling for a cool end to August in the Northern Plains. Drought and lack of chilling unit hedges in the West for next winter should be considered. Excess heat hedges for the Southeast should also be considered.
Hazards Outlook Commentary: The map is the 3-7 Day weather hazards map for the US. Heavy rain along the Gulf Coast but drought in South Florida, the Carolina s and all of the West, excessive heat in the desert, high winds in the Western Plains and heavy rain in the upper Plains. Recommendation: Early Fall freeze hedges should be considered everywhere there was late planting and particularly in the North for row crops and into Texas for cotton where the crop is still 2-4 weeks behind. High Plains cotton still late but catching up some with hot weather Excess rain hedges and lack of Growing Degrees can also be considered for areas that have had toomuch rain or late planting.
Short Term Precipitation Outlook Commentary: The 5 and 7 day outlooks forecasts 1 to 2 rain in the Canadian Prairies and Northern US Plains, generally light to no rain for most of the US other than the Gulf Coast with 3 rains just onshore. 8/12/2015 8/17/2015 Recommendations. Drought and heat hedges for the PNW and Canada for this summer and next fall/winter and heat hedges for this summer and fall 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. Municipalities and building owners should consider purchasing excess snow hedges for next winter and remember we now offer weather protection for your concerts, fairs, tournaments and other outdoor events which is generating strong interest. If you have an upcoming event in your area, call the organizer, get some details such as the date and amount at risk and call us at (800) 603 3605 for a quote. 8/12/2015 8/19/2015
6 10 Day Weather Information Commentary: Wednesday s 6 10 day temperature outlook for August 18 th August 22 nd shows widespread above to much above normal temperatures for most of the US with the most above normal in the Northeast through the Central Belt and then again in the West. Below to much below normal in the Midwest with an early harbinger of fall and possibly freezing temperatures around the corner. The lower map is the 6-10 precipitation outlook with above normal rainfall forecast for the eastern 2/3rds of the US and below to much below normal rainfall returning to the West. Recommendations. Heat hedges for feedlots and dairy with our new heat index hedges performed exceptionally this summer and can still be bought. With the strengthening El Nino increasing the risk of a cooler and wetter summer in the South, the risk of more frequent snow and ice events in the South/Southeast increases as does the risk of a warmer and drier Northern US for this Fall and Winter which could also mean less snow and more ice. Call for a quote for your risk.
8 14 Day Weather Information Commentary: The 8 14 day temperature outlook for August 20 th to August 26 th forecasts above to much above normal temperatures continuing for most of the US and below to much below normal continuing in the upper Plains. Recommendation. Heat and/or drought hedges in the South/Southeast are still recommended where contracts can start in 20 days. Heat hedges in the West where a very active fire season is well underway and is worsening every day with these dry and warm conditions. Call or e-mail us to discuss how these work for your risks. We are also seeing interest from building owners and municipalities for snow and cold winter hedges in the Midwest and East Coast for next winter as well as transportation/logistics hedges where cold winters constrain truck, rail and barge/boat traffic and hauling.
8 14 Day Weather Information Commentary: The 8 14 day precipitation outlook for August 20 th to August 26 th shows continued below normal rainfall for the Western US and above to much above normal rainfall continuing for the eastern 2/3rds of the US. 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 were still trying to plant soybeans even into 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 as well as into harvest on barley and spring wheat should also be considered where we have special protections available.
Issue 242 August 13, 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 Cows stand in a flooded pasture at the corner of West Oak Harbor Southeast Road and Ohio 273 in Oak Harbor, Ohio. eweatherrisk, Inc. 5251 W. 116 th Pl, Suite 204 Leawood, KS 66211 (800) 603-3605