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 new season United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report has dropped overnight. The May report is the
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.
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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?
Record Crops, Tight Stocks
The new season United States Department of Agriculture (USDA) World Agricultural Supply and Demand Estimates (WASDE) report has dropped overnight. The May report is the
Wheat walking a fine line
The wheat market is caught in a tug of war between two opposing forces. On one hand, the building supply numbers as good in-crop rains
Will the season stop the canola swing?
It has been a little while since we looked at futures curves, with an eye to how plantings might be impacted. The spread between canola
Weather drives the news cycle
It has been a relatively quiet week on the markets. Possibly a mere coincidence that there has been less antagonistic language coming from the White
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.
MEET THE TEAM
Our team of market analysts are recognised as leaders in Australian Ag market analysis, providing invaluable insights to help you navigate the ever-changing commodity landscape.
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.