There is added emphasis in the condition of next seasons Northern Hemisphere crops. This is not entirely unexpected given the tight balance sheets held by the major exporters. We can expect to see extra volatility in the months ahead as seasonal conditions are as-sessed, stocks are drawn down and the all-important acreage expectations get released. It is going to make for some good trading opportunities.

The US released their first look at winter wheat planting, which at 80% and 55% emerged, is pretty much right in the middle of expectations.  Good rains in the past 30 days should see crops establish well ahead of winter.

China has seen some excessive out of season rains that has disrupted corn harvest.  This has caused the price of corn to skyrocket.  It is also delaying the winter wheat plant.  At 25% complete, it is about half of the long-term average.  Counter to what is happening in the US, a delay in Chinese planting pace throws questions around how well the crop will establish before winter and if fields can get dry enough to allow field work.  Perhaps as an indication of the concern, Chinese state reserves auctioned 1mmt of old crop wheat, which was snapped up by buyers wanting to switch from corn. 

Planting of first crop soybeans in Brazil is moving ahead favourably courtesy of early rains.  Figure 1 shows the seeding pace in Matto Grosso at 69% complete, ahead of last years 25% and the 5-year average of 41%.  Nationally, soybean seeding sits at 38% ahead of the average 27%.   Why is this important? Last year’s soy harvest was significantly delayed due to weather, which resulted in the safrinha (second) corn plant being delayed.  This pushed corn maturity deep into the dry season which ultimately affected yields.   Despite the formation of back-to-back La Niná weather patterns, rains are forecast across much of Brazil this week keeping crops in good shape.

Lastly, some concerns have been raised over dry conditions in the Black Sea region.  Rains have been lacking in the past 14 days which is building a decent shortfall in Ukraine and Central Russia.  Ukraine planting progress is at 85% complete, so it will be interesting to see if the remainder gets planted if dry conditions prevail.

Next week

US corn harvest delays, increasing Russian rouble (and export tax) and dry conditions in the Black Sea region is seeing the market grind higher.  There is a lot of time to play out, but you can see the shadows are lengthening and the market is jumpy.

 

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*Figure 1 source: Soybean plantings 2021/22 https://www.imea.com.br/imea-site/dashboards

*http://www.worldagweather.com/

Data sources: USDA, Reuters, IMEA, WorldAgWeather, Mecardo.

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