Flooding impaired corn to such a degree that 10-12% of the US crop has no hope for anything close to a normal yield.
NEW YORK (PRWEB) August 6, 2008
"Our outlook combines state-of-the-art atmospheric research technologies with 150 years of historical data to give businesses a risk probability that they can use to measure, monitor, anticipate and manage their climate and weather-related risks," said Paul Walsh, Storm Exchange Chief Strategy Officer. "For the season ahead, we see positive weather on tap for the retail sector but a much less rosy outlook for agriculture and energy, where the full impacts of the historic flooding in the Midwest and the potential for a highly active hurricane season have yet to be fully realized."
Despite growing optimism from the USDA, Storm Exchange still expects the U.S. corn yield to be significantly below trend this year. Most U.S. corn yield estimates have improved since the early summer ranging from 148 to 151 bushels per acre (which is roughly in line with last year's successful 151.1 bushel-per-acre harvest). The Storm Exchange Early Autumn 2008 Weather Risk Outlook projects that the crop will produce 143 bushels per acre, 7% below trend, based on the extensive rainfall the Midwest endured throughout the spring and early summer.
"Recent upbeat projections seem to hide the fact that corn was planted late and has been irreversibly damaged by excessive rainfall in the top producing states," said Gail Martell, Storm Exchange Senior Agriculture Analyst. "Flooding impaired corn to such a degree that 10-12% of the US crop has no hope for anything close to a normal yield."
The fall will be coming earlier this year in the key Northeast and Midwest cities, and retail sales should get a boost, according to the Storm Exchange Early Autumn 2008 Weather Risk Outlook. According to the firm's analysis, for every 1°F the monthly temperature drops in September, comparable store sales at specialty apparel and department stores increase 50 basis points. This year, the firm's prediction of a cooler fall promises to add in at least 100 basis points for specialty apparel/department store retailers. While still weighed down by economic uncertainty, the easy comparison to last year and the correlation between cooler temperatures and sales of seasonal apparel in the fall will likely result in upside during this period for the retail sector.
With hurricanes already starting to rumble through the Gulf region, the energy sector remains at risk. According to the Storm Exchange Early Autumn 2008 Weather Risk Outlook, there is now a 92% chance that the hurricane season will be above average. Storm Exchange puts the probability of a U.S. hurricane strike after July 31st at 77%, with a 46% probability of an intense hurricane strike. The likelihood of a hurricane hitting the Gulf region is 42%. In terms of total storms, Storm Exchange predicts 13-15 tropical storms and 7-9 hurricanes in 2008, a slight increase over the company's June outlook. The increased threat level is likely to have a significant impact on energy price volatility, regardless of any supply disruptions resulting from a hurricane strike in the western and central Gulf.
About Storm Exchange, Inc.
Storm Exchange is a leading provider of weather-related financial risk and information services.
The company helps corporations improve performance by identifying, quantifying and controlling the impact of weather on their income and expenses. Storm Exchange also serves investors, insurers and other financial industry participants with analytic solutions that offer greater insight into how weather impacts investment and risk portfolios.
Storm Exchange solutions include industry-specific weather indices, data/analytics, forecasted weather risk scenarios, and hedging programs. These solutions address the fundamental drivers of financial performance that result from exposures to precipitation, wind, temperature and other climate variables.
Storm Exchange is headquartered in New York and operates a weather research center in State College, PA. Storm Exchange is backed by leading private equity investors RRE Ventures and Venrock Associates.
Storm Exchange, Inc., a market leader in weather-risk management services, today released its Early Autumn 2008 Weather Risk Outlook, a 90-day projection of the impacts of the weather on businesses in the agriculture, retail and energy industries.
agriculture, corn, corn yield, energy, energy prices, hurricane, retail, retail sales, usda, weather