UPDATE 1-Deep freeze persists in U.S. Midwest; winter wheat at risk

Tue Jan 28, 2014 7:48pm EST

By Julie Ingwersen

CHICAGO Jan 28 (Reuters) - The U.S. farm belt remained locked in a deep freeze on Tuesday, with sub-zero (Fahrenheit) temperatures hampering grain movement and likely damaging portions of the region's dormant winter wheat crop.

The latest arctic outbreak has slowed barges on the Mississippi and Illinois rivers, major arteries for supplying corn, soybeans and wheat to exporters at the U.S. Gulf.

"The biggest transportation issue in the grain business, recently, with this cold has been that the Illinois River is frozen. That stops a whole bunch of traffic," said Hal Reed, chief operating officer for The Andersons Inc, a U.S. grain handler and ethanol producer.

The U.S. Coast Guard has restricted traffic to one-way only along a 15-mile stretch of the river near Peoria, Illinois, because ice buildup has narrowed the shipping channel. Also, the Army Corps of Engineers has restricted the width of barge tows passing through some locks.

Gulf Coast exporters were offering a premium for soybean barges loaded this week along the largely ice-free lower Ohio River and on the Mississippi south of Cairo, Illinois.

Along with the river issues, the cold blast has caused localized shortages and price spikes for natural gas, the fuel used to power many ethanol plants and other grain processors.

Reed said the Andersons' four ethanol plants, located in Iowa, Indiana, Ohio and Michigan, have all been affected by shortages of natural gas. The plants have avoided shutting down, but have had to run at reduced rates or at a higher cost for brief periods.

"The whole ethanol industry has probably experienced that, just like the whole corn processing and soybean processing industry has experienced it," Reed said.

WINTER WHEAT DAMAGED

Temperatures dropped to about minus 5 degrees Fahrenheit (minus 20.5 Celsius) overnight in the southern Midwest, areas where winter wheat crops lack a protective layer of snow cover.

"There is definitely some winterkill in central Illinois, and a little bit in west-central Indiana, northern Missouri and east-central portions of Nebraska," said Don Keeney, a meteorologist with MDA Weather Services.

"It's not huge amounts of damage. I'm saying less than 10 percent of the belt," Keeney said.

Another private weather service, the Commodity Weather Group, reported "limited winterkill damage" in nearly 5 percent of the Plains and Midwest wheat belts, with the hardest-hit areas in central South Dakota, northeast Missouri and central Illinois.

Temperatures are expected to rise to 29 F (minus 2 C) in Chicago by Thursday, Keeney said.

A series of storm fronts Thursday through Saturday should bring snow to northern Illinois, Wisconsin and Michigan, as well as Iowa and northern Missouri, providing insulation to crops in those areas. But the precipitation will likely miss central Illinois and southwest Indiana.

Another push of cold air follows, expected to send temperatures in Chicago to about 2 F (minus 17 C) on Sunday, Keeney said.

"We are going to continue to see these cold surges out of the northwest over the next 15 days," he said.

Forecasting models showed storms crossing the southern Plains and Midwest toward the middle of next week that should bring snow to central Missouri and southern Illinois, followed by yet another cold spell.

Farther west, next week's storm should bring much-needed moisture to the southern Plains' hard red winter wheat belt, including snow in Kansas and a mix of snow, ice and rain in Oklahoma and Texas.

"Across Kansas, we should see a decent improvement in moisture, even down into Oklahoma and Texas," Keeney said.

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