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.

Commodity Conversations

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?

We love to hear from you!
Print This Post

Click on graph to expand

*https://www.noaa.gov/

*https://www.leftfieldcr.com/

Data sources: USDA, Reuters, SovEcon, Left Field Commodities

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Grains & Oilseeds

The future of biodiesel

Last week we touched briefly the relationship between biodiesel production and world demand for oilseeds. Today we take a closer look at what is driving

Read More »
Field of wheat
Grains & Oilseeds

A week in wheat

The market continues to revolve around three main storylines – Canadian drought, Brazilian corn and Chinese demand. There are a few side issues going on

Read More »

Don’t have an account with us? Join free.

You can have full premium access to all of our content with a monthly or annual subscription. 

Alternatively, create a free account to access our Insights blog and two free premium article a month!

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
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.

Photo of a farmer surrounded by Merino sheep in dusty yards
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. 

Image of harvested grain pouring into a chaser bin
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.