Cattle Today

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CATTLE TODAY

COMMODITYINSITE.COM

by: Jerry Welch

August 29, 2008 -- The 192 year-old publication, The Farmers Almanac is predicting that at least two thirds of the country can expect colder than average temperatures this winter with only the Far West and Southeast in line for near normal readings. Almanac editor Peter Geiger says, "this is going to be catastrophic for millions of people." The almanac predicts above normal snowfall for the Great Lakes and Midwest, especially during January and February.

Agricultural producers and traders know well that the "wild card" for grain and often times livestock prices is Mother Nature. A hot and dry summer can boost prices to historically high levels as crop yields are reduced. An unusually harsh winter increases demand for corn and high protein soybean meal. Heavy snows in the livestock regions of the nation can not only cause winter kill for cattle and hogs but prolonged snowfall or muddy conditions reduce animal weights.

History shows that all major, bull markets for cattle prior the past few years were sparked by harsh winter conditions in the January to March period. Show me cold, snowy conditions in the heart of winter and I will show you a bull market for cattle!

On the other hand, the National Weather Service is calling for a warmer than normal winter over most the nation. The Farmers Almanac and the National Weather Service are at odds about what to expect this winter. A disagreement over a weather forecast? What is the world coming to! Bryce Anderson, DTN Ag Meteorologist and DTN Analyst tells a funny story about a weather forecast he made and the reaction it got from farmers and ranchers attending the recent Farm Progress Show. He said, "This is my first Farm Progress Show, but I had an experience Wednesday that I'll bet almost no one else of the millions who have been to this exposition have ever had. I got a chorus of "Boo!" from a crowd during a radio show. " "Yep--it happened when I was interviewed on a live broadcast of the Des Moines radio station WHO "Big Show" just before noon. The show is hosted by long-time acquaintances of mine, Ken Root and Mark Pearson. Prior to yesterday, I would have added "friends" to that line--but I'm not so sure now.

Just kidding. Now to the details of the crowd reaction: "Forecast models are showing a little more vigor in the upper atmosphere over the Canadian Prairie and the northern tier of states during the next couple weeks. Instead of a west-to-east zonal jet stream pattern, there is more of a north-to-south air flow. That, of course, means that colder air in far northern Canada has a more favorable path into the continental U.S."

"And, that's where the hisses from the crowd come in. We've already had one frosty shot in the north country this week (upper 20s in northeastern Minnesota, northern Wisconsin and northern Michigan Sunday night). Well, this more active north-to-south upper air pattern has the potential to bring a similar temperature track into Minnesota during next week—the week following Labor Day. With corn running some 10 days behind normal on development and soybeans about 10-14 days behind, any talk of cold air is going to get a fearful reaction."

"In my case, I said, "We could see some temperatures in the 30s during next week..." and before I could finish the sentence with "...in Minnesota...", the live radio audience (made up mostly of Iowa producers) sent out the legendary "BOOOO!! my way."

Boo's and cat calls coming from the mouths of farmers and ranchers because of an unwelcome weather forecast does not surprise me. Ag producers have already this year endured the whims and ways of Mother Nature and their patience is wearing thin. In June, for instance, heavy rainfall led to flooding in large parts of the Midwest that in turn sent corn prices soaring to a record high of $7.991/2 a bushel. Unfortunately, those high prices were fleeting and by mid August, values were nearly $3 a bushel off their high.

The ultimate wild card for grain and livestock producers is Mother Nature. An early frost that ends the growing season prematurely. A wet harvest that can reduce yield and production. Or, a long, harsh winter that impacts livestock are bullish forces not to be taken lightly. And over the past few days, several well respected weather experts are sticking their necks out and making such forecasts. Are they right or wrong? Only time will tell!

(The information in this article is the opinion of Commodityinsite.com's Jerry Welch and subject to change without notice.)

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