Cold weather impacts North American grain markets

Cold snaps that have frozen stretches of the Mississippi River rippled through North American grain markets in the week ended Jan. 23, lifting US corn freight costs, supporting North America wheat values, while soybean basis at CIF NOLA found support from navigation restrictions, and DDGS markets strengthened as winter disruptions and rising energy costs tightened nearby supplies, market participants said.

Corn market pressured by low temperatures: sources

Cold weather and frozen sections of the Mississippi River affected the US corn market during the week ended Jan. 23, with sources reporting higher freight costs for CIF New Orleans and rising FOB Gulf prices.

While prices remained relatively steady on Jan. 19-20, this was followed by an increase on Jan. 22 of $2.10/metric ton in the outright price for CIF New Orleans (January shipment), a rise of $1.70/mt for CIF NOLA (February shipment), and a climb of $3.25/mt for the FOB Gulf outright price (March shipment).

Sources attributed the climb to freight costs in the CIF NOLA market.

“It’s all river logistics,” a trader in the CIF NOLA market said, noting that parts of the Mississippi were frozen, keeping water levels down and causing navigation restrictions that make it harder for grains to reach the port of New Orleans. Participants said cold weather plus current affairs were key market drivers.

“I think river logistics and potential for reciprocal tariffs are affecting things much more,” an FOB Gulf trader said.

Low temperatures could also reportedly affect grain crushing, with ethanol facing pressure. The US Energy Information Administration published on Jan. 22 that ethanol output averaged 1.119 million b/d for the week ended Jan. 16, down 77,000 b/d from the week ended Jan. 16.

“Intense cold can temporarily affect corn and soybeans crushing,” a trader said, adding, “Ethanol margins are already showing some pressure.”

Platts, part of S&P Global Energy, assessed the outright price for FOB Gulf for March shipment at $432.75/mt on Jan. 23, while the outright price for CIF NOLA for February shipment was at $430.18/mt

CIF NOLA soybean basis supported by cold weather

Sources in the US soybeans market said that navigation restrictions along the Mississippi River due to low temperatures supported the CIF NOLA basis, with Platts-assessed basis for CIF NOLA for February shipment at 103 cents/bushel over the March (H) soybeans futures contract on Jan. 23.

“The Mississippi River is freezing, and that’s causing water levels to drop, which is making barge drafts,” a trader in the CIF NOLA market said. “Because restricted so less beans can make it to the Gulf per barge, and there’s less barge availability, so freight is going higher.”

The barge freight increase was also felt in the export market, with exporters reportedly struggling to get soybeans to New Orleans for shipping.

“The barge market is so elevated for January, February and March, that the values are getting pretty crazy,” a trader in the FOB Gulf market said. “We are scrambling to get beans in position to load the [exports] program.”

Platts assessed the soybeans outright price for FOB Gulf for March shipment at $432.75/mt on Jan. 23, while the soybeans outright price for CIF NOLA for February shipment was at $430.18/mt.

Cold weather and dryer shutdowns support DDGS values

US dried distillers grains with solubles markets strengthened in the week ended Jan. 23 as winter weather, river disruptions and rising energy costs began to weigh on logistics and production, tightening nearby availability and supporting values across several regions, market participants said.

Cold weather across large parts of the US was increasingly influencing market behavior, particularly in rail and river channels.

One trader said the cold “puts people on edge,” noting that rail markets could strengthen as temperatures continue to fall. The trader added that natural gas prices were rising, prompting some ethanol producers to consider shutting down dryers to manage costs.

Regarding the higher natural gas prices, one broker said plants were indeed starting to shut off dryers, adding that with river conditions freezing and another winter storm approaching, “you have a mess brewing” in the DDGS market. The broker said the situation could be “very affected” in the near term as logistical challenges intensify.

River conditions were described as a growing concern. One trader said freezing river sections and storm-related disruptions are likely to restrict movement, reinforcing firmness in CIF markets. “With issues on the river to load, CIF had to jump up a bit to make sure many have the barges to load their committed boats.”

In the Chicago truck market, logistics were also becoming more difficult, contributing to firmer values.

“Seems to be firming all over in the front — low temperatures, natural gas costs and CIF barges seem to be firmed up in the front as well,” one broker said.

Overall, market participants said cold weather, elevated energy costs and tightening logistics were supporting a firmer near-term DDGS market, particularly for front-month supply, as winter conditions persist.

Platts assessed CIF New Orleans dried distillers grains with solubles barges for the January shipment period at $220/short ton. The Chicago DDGS truck market for the February delivery period was assessed at $175/st.

North America wheat rallies on freezing temperatures

The US Department of Agriculture’s Agricultural Weather Highlights for Jan. 23 reported sub-zero degrees Fahrenheit temperatures settling across the Northern Plains, with temperatures reaching minus 20 F (minus 28 Celsius) in North Dakota, posing a risk to winter wheat in the area.

Winterkill concerns boosted wheat futures on Jan. 22-23. The MIAX Hard Red Spring wheat futures closed 7-10 cents higher across the board on Jan. 22, while Kansas City Hard Red Winter wheat futures and CBOT Soft Red Winter wheat futures saw more notable increases on Jan. 23, closing 14-15 cents/bu and 12-14 cents/bu higher day over day.

According to Aaron Gerdts, principal crops analyst at S&P Global Energy CERA, most winter wheat areas were without snow cover as of the morning of Jan. 23.

“Winter wheat in parts of Nebraska, Kansas, Missouri, Illinois, Indiana, and Ohio was directly exposed to cold temperatures for various lengths of time on Friday,” he said.

Some snow began in parts of Nebraska and Kansas on Jan. 23, which is expected to move east toward Missouri, Illinois, Indiana, and most of the Northeast US, Gerdts added.

“Damage is possible in some areas. We do not believe this will be widespread, as snow eventually provided insulation to most areas.”

Canadian spring wheat prices also strengthened, tracking strong US spring wheat futures as basis premiums remained firm, as canola demand following a reduction in tariffs by China constrained capacity.

Recent lower futures had also dissuaded CWRS producer sales, with the last spring wheat rally seen on Dec. 17.

“Basis levels have been strong as farmers aren’t selling so much, although with the futures up now, we are seeing more action,” a Canada-based trader said.

Platts assessed Canada Western Red Spring Wheat 13.5% FOB Vancouver 30-45 days forward at $257.58/mt on Jan. 23, up from $253.44/mt on Jan. 21, prior to the futures rally.

Tags: prices, wheat, USA