Winter Storm Leon: another reason to be bearish?

by Laura Lloyd
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OVERLAND PARK, KS. — Frozen conditions in New Orleans because of Winter Storm Leon have in all likelihood sharply reduced or even closed operations at the port, adding to downward pressure on wheat and soybean prices, said Sid Love, grain analyst at Joe Kropf/Sid Love Consulting.

As a result, exports of grains and oilseeds from ports in New Orleans would have slowed significantly, he said. Wednesday’s relatively steep losses in wheat and soybean futures prices may in part be reflecting logistical problems at leading U.S. grain ports in the South, he said. The storm has produced unseasonable cold and ice from Texas to the Carolinas. The National Weather Service issued a winter-storm warning for Atlanta Wednesday morning.

Mr. Love said he was in New Orleans late last week and noted bridges were closed Friday and road conditions were poor. As a result, he said, employees were unable to get to work in a city where ice is extremely rare.

“Getting employees to the grain elevators is the problem,” he said.

He guessed that the bad weather led to “liquidations of all kinds of positions.”

The weather in the Southern United States has added insult to injury to agricultural commodity markets, he noted, building on other bearish fundamentals such as large world supplies and strong export competition from other countries.

“It is raining in Argentina, maybe too much,” he said, reflecting on a bearish factor affecting soybeans. “The knee-jerk wisdom is that ‘rain makes grain’.”

“The market would like to see something bullish,” Mr. Love said, but he noted it may be next fall before a real low is made in corn, soybeans and wheat, assuming 2014 crops are close to the size they were in 2013. Wheat is trading at multi-year lows, corn was a record crop and soybeans have been trending lower since mid-2013.
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