February 8, 2010 / 8:22 PM / 9 years ago

U.S. commodity markets contend with harsh winter

CHICAGO (Reuters) - One of the stormiest winters in years for much of the United States is wreaking havoc on the nation’s livestock and energy markets and there may be at least three more weeks of cold, snowy weather.

Cold and snow blanketed much of the central United States this winter slowing weight gains in cattle and hogs, delaying livestock sales, and increasing feed costs for producers.

As the Mid-Atlantic states dig out from Saturday’s blizzard, another potentially crippling winter storm was on the way and might also hit the Northeast, the nation’s largest market for heating fuel, which the weekend blast largely bypassed.

New York heating oil and natural gas prices rose in the morning as talk circulated the cold may last through February.

Winter wheat in the Plains was aided by the snow, which insulated the crop during the cold and will ensure plentiful crop moisture this spring.

In the Texas panhandle, cattle in feedlots are weighing 40 to 60 lbs less than expected, as they had to trudge through muddy pens and endure damp, cold conditions.

“I have heard of weigh-ups 40 to 60 lbs off from projections,” Don Close, director of marketing for the Texas Cattle Feeders Association, said of the cattle.

Texas is the largest cattle state, with nearly 2.8 million head in feedlots being fattened for market, most of those feedlots are in the state’s panhandle.

Light snow fell in the panhandle on Monday, but the next three days should be dry before more snow on Thursday, said Joel Burgio, meteorologist with Meteorlogix.

The panhandle has had more than 16 inches of snow since December 1, or 60 percent more than normal, he said.

Cattle have been stressed in Kansas, Nebraska, and Oklahoma. In Nebraska, the No. 2 cattle state, there have been abnormal amounts of cold and snow.

The slow down in cattle performance led to higher cattle prices, with sales of $87 per hundredweight last week in the Plains, up $1 to $2 from the previous week, said Close.

HOG MARKETINGS SLOWED

Forecasts call for 3 to 6 inches of snow through Tuesday in Iowa and Minnesota, and 4 to 8 inches later in the week for Illinois, Indiana, Michigan, and Ohio, said Burgio.

Worries about weather-delayed hog marketings sent Chicago hog futures sharply higher on Monday, to their highest levels in more than a week.

Most Midwest hogs are raised indoors, but the weather has still slowed weight gains, while drifting snow has prevented trucks from delivering hogs to market.

“I have quite a few hogs coming in light,” said a western Iowa hog dealer. “Weights have been down for two weeks now and I think they will be lower again.”

In Iowa, the cold was only one reason for the lower weights. Low quality feed corn and sickness among some of the herds also has slowed gains.

WINTER WHEAT PROTECTED BY SNOW

The snow from Nebraska to the Texas panhandle has been good for the dormant hard red winter wheat, the most common U.S. wheat and commonly made into bread.

“Snow is a good thing,” said Bill Spiegel, spokesman for Kansas Wheat, a growers association in the largest U.S. wheat-producing state. “Snow insulates wheat from frigid temperatures and provides much-needed moisture to the crop.”

Spiegel said that while frigid temperatures are always a concern, this year’s crop has been “hardened” by the winter weather so far this season, so the dip to single-digit temperatures or below should not be a significant worry.

U.S. heating demand this week is expected to be 11.5 percent above normal, the National Weather Service said on Monday.

Heating oil demand was expected to average 7.6 percent above normal.

NYMEX March natural gas futures ended slightly lower after morning rallies. But most cash prices were higher.

“The forecast looks cold almost through the month, so prices should stay fairly strong as long as the cold sticks around, but most of the economic data is still bearish,” said one Pennsylvania-based trader.

(Additional reporting by Carey Gillam in Kansas City; Joe Silha and Eileen Moustakis in New York)

Reporting by Bob Burgdorfer; Editing by Alden Bentley

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