The merry-go-round that is the weather market remains firmly in place. After last week’s WASDE fireworks, the weather forecast flipped to a cooler, wetter system and the ag commodities came crashing back down to earth. The change in weather conditions across the US Mid-West is ideal for row crop development and flowering/silking.
Models are chopping around a bit, but most of Minnesota, North Dakota & South Dakota (MN, ND & SD) as well a fair portion of the Canadian Prairies had been forecast to get a drink. (Note that the most recent run shows ND, southern MN and Iowa getting wet, but much of the Canadian Prairies remain dry).
This week looms as a critical one for Canadian crop potential. After a week of abnormally hot temperatures, the crop is at a tipping point. It is evident that a lot of spring sown crops have already suffered – wheat losing tillers, scorched flag and running up small heads, canola aborting immature pods. At the start of the week, we saw $30/t wiped from the ICE canola contract, demonstrating the huge risk premium that had built up over the past week. However, as the forecast reverted to a drier pattern, that premium has been steadily building up again.
Russian and Black Sea crops continue to track along in favourable conditions. SovEcon again raised forecast for production and exports to 84.6mmt and 38.4mmt respectively. Starting yields in Russia’s south are around 3.1t/ha (down 3% yoy) but it is early days. There remains a drought watch on parts of Russia spring wheat crops, but the winter wheats in the south and central Russia are expected to be excellent.
One area that needs watching is Parana (Brazil) which after a drought is now experiencing frosts in a sub-tropical climate. Corn maturity is ranging from dough stage to early dent, with the former at most risk of damage. It is hard to pin down exact numbers for potential losses or what the current production estimate is, but expect further downside.
The week ahead….
Wheat will continue to follow the corn and bean markets, so while the US Mid-West looks like getting a decent rain, we may see some more downside. But I don’t think this weather market is over yet. Analysts are starting to trim back Canada’s wheat and canola crops and I don’t think they have finished.
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.
Rains on the Plains?
Models are chopping around a bit, but most of Minnesota, North Dakota & South Dakota (MN, ND & SD) as well a fair portion of the Canadian Prairies had been forecast to get a drink. (Note that the most recent run shows ND, southern MN and Iowa getting wet, but much of the Canadian Prairies remain dry).
This week looms as a critical one for Canadian crop potential. After a week of abnormally hot temperatures, the crop is at a tipping point. It is evident that a lot of spring sown crops have already suffered – wheat losing tillers, scorched flag and running up small heads, canola aborting immature pods. At the start of the week, we saw $30/t wiped from the ICE canola contract, demonstrating the huge risk premium that had built up over the past week. However, as the forecast reverted to a drier pattern, that premium has been steadily building up again.
Russian and Black Sea crops continue to track along in favourable conditions. SovEcon again raised forecast for production and exports to 84.6mmt and 38.4mmt respectively. Starting yields in Russia’s south are around 3.1t/ha (down 3% yoy) but it is early days. There remains a drought watch on parts of Russia spring wheat crops, but the winter wheats in the south and central Russia are expected to be excellent.
One area that needs watching is Parana (Brazil) which after a drought is now experiencing frosts in a sub-tropical climate. Corn maturity is ranging from dough stage to early dent, with the former at most risk of damage. It is hard to pin down exact numbers for potential losses or what the current production estimate is, but expect further downside.
The week ahead….
Wheat will continue to follow the corn and bean markets, so while the US Mid-West looks like getting a decent rain, we may see some more downside. But I don’t think this weather market is over yet. Analysts are starting to trim back Canada’s wheat and canola crops and I don’t think they have finished.
Have any questions or comments?
Click on graph to expand
*https://www.noaa.gov/
*https://www.leftfieldcr.com/
Data sources: USDA, Reuters, SovEcon, Left Field Commodities
Categories
Have any questions or comments?
Moving in the right direction
The worm seems to have turned somewhat in the grain and oilseed complex. While there is some short-term support coming from yet more geopolitical unrest,
Geopolitics and shorts weather
Amazing the difference a week can make. It all started last Friday morning, with continued escalations in the Middle East. The wheat market jumped 20
Exchange rates helping wheat values
The exchange rate has been in the news lately, with the Australian dollar falling to a six-month low last week. Given this, we thought it
Argentina dealt a cruel hand
It has been a relatively benign week in the wheat market. Some of the risk premium that had built up over Middle East concerns has
Want market insights delivered straight to your inbox?
Sign up to the mailing list to get regular updates to new analysis and market outlooks
Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published
Listen to the podcast
Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.
Research: Analysis of the Australian sheep flock
In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making.
SERVICES AND CAPABILITIES STATEMENT BROCHURE
We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.