Whoever said grain markets were dull probably has never experienced a year like the one we’ve had. The past week has been no exception as the weather has been at the forefront of price moves across agricultural commodities this week.
The US Midwest, the heart of the corn and bean regions, has been dry after getting their crops in early. The weight of an early plant, record acres, and a forecast of record production has given way to doubts that trend line yields can be achieved due to a prolonged dry spell, see Figure 1 per UK Agriculture and Horticulture Development Board.
Rain forecasts keep shifting with every run. Current corn crop conditions are rated at 64% good to excellent, down 5% points on the week and well below the 73% recorded this time last year. Much of the expected surplus in corn stocks this year was attributed to the US achieving above-trend line yields and marking a 388mmt production estimate, 10% higher than last year. Rainfall models do turn wetter in mid-June, which would be a ‘just in time’ event.
The war in Ukraine took another decidedly nasty turn with the Russians (allegedly) blowing up a major hydroelectric dam. The Nova Kakhova dam was breached during the week and sent the equivalent of 36 Sydney Harbours worth of water down the Dnipro River. The dam, other than supplying hydroelectricity, also provided water for human consumption and irrigation. It is estimated that 500 thousand hectares of arable country has been severely degraded by the subsequent flooding and inundation. The Dnipro River is a major transport corridor housing a number of relatively important port facilities.
Interestingly though, the market barely blinked. It has possibly extended the war by stymying the Ukrainian counter-offensive which was due to start. If the combination of the dam failure, military action picking up, 30% of Chinese crops under water, and poor US weather can’t spook the speculative traders to cover their trades, what will?
Next week
This weekend the USDA will release its June WASDE report. The US weather will dictate price direction this week with rain in the forecast potentially undermining recent strength.
Faba beans have become a popular break crop in southern states, delivering not only a valuable export or feed commodity, but also giving nutritional benefits
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.
Whether the weather…
The US Midwest, the heart of the corn and bean regions, has been dry after getting their crops in early. The weight of an early plant, record acres, and a forecast of record production has given way to doubts that trend line yields can be achieved due to a prolonged dry spell, see Figure 1 per UK Agriculture and Horticulture Development Board.
Rain forecasts keep shifting with every run. Current corn crop conditions are rated at 64% good to excellent, down 5% points on the week and well below the 73% recorded this time last year. Much of the expected surplus in corn stocks this year was attributed to the US achieving above-trend line yields and marking a 388mmt production estimate, 10% higher than last year. Rainfall models do turn wetter in mid-June, which would be a ‘just in time’ event.
The war in Ukraine took another decidedly nasty turn with the Russians (allegedly) blowing up a major hydroelectric dam. The Nova Kakhova dam was breached during the week and sent the equivalent of 36 Sydney Harbours worth of water down the Dnipro River. The dam, other than supplying hydroelectricity, also provided water for human consumption and irrigation. It is estimated that 500 thousand hectares of arable country has been severely degraded by the subsequent flooding and inundation. The Dnipro River is a major transport corridor housing a number of relatively important port facilities.
Interestingly though, the market barely blinked. It has possibly extended the war by stymying the Ukrainian counter-offensive which was due to start. If the combination of the dam failure, military action picking up, 30% of Chinese crops under water, and poor US weather can’t spook the speculative traders to cover their trades, what will?
Next week
This weekend the USDA will release its June WASDE report. The US weather will dictate price direction this week with rain in the forecast potentially undermining recent strength.
Have any questions or comments?
Click on graph to expand, from UK AHDB
Click on graph to expand
Data sources: AHDB, Reuters, USDA, Next Level Grain Marketing, Mecardo
Categories
Have any questions or comments?
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
Performance from pulses
Faba beans have become a popular break crop in southern states, delivering not only a valuable export or feed commodity, but also giving nutritional benefits
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.