THE WATCHLIST:
Rotation
Crop worries recede in the US, continue in China, and spread to Europe and Brazil.
AUSTRALIA
Australia’s winter crop regions remain mostly dry. Weather models, encouragingly, are hinting at a ‘break’ at the end of May.
WORLD
WHEAT
Wheat continues to have many regions on The Watchlist. And, we suspect, market forecasts are either lower, or soon will be, for China and the US. The scale of crop cuts is likely modest given wheat’s supply context. A dry Australia would loom as a larger problem, but there is still time for rain to fall.
COARSE GRAIN
The coarse grain market saw watches in the US shrink to all but nothing over the past week. That change helped prices find new lows. Some modest concerns about Brazil and north-west Europe are partial replacements. Also, summer crops in China remain on a track for a dry start. None of them are especially pressing. So, crop forecasts are not falling. Even so, the issues are at a scale that should provide some support for prices.
OILSEEDS
Oilseeds remain, with watches much the same, very similar to coarse grain. The scale of the issues is material but lower crop forecasts are not imminent. And, because oilseeds have greater supply comfort, the support for prices is modest at most.
AUSTRALIA – A break on the horizon?
Australia’s winter crop regions likely remain dry for another week.
- Weather forecasters expect little rain in Australia’s crop regions over the next week or so.
- Encouragingly, weather models are projecting a little rain at the end of May.
- Many will be hoping that this event is a ‘break’.
- Soil moisture, for now, will not be enough to start crops.
- So the majority of crop regions remain on ‘watch’.
- Waiting for June rain is not unusual.
- Analysts are unlikely to lop crop forecasts near-term.
- New-crop prices will likely remain firm for now.
WORLD: Rotation
Northern summer crop watches narrowed in North America but remain broad in China. And there’s now a little worry that Brazil’s corn might suffer in a dry period that extends to the cusp of May and June. Wheat watches remain widespread. Australia, China and the US still have material areas with challenges.
Southern Summer Crops
Brazil’s dry period looks likely to extend somewhat.
- Weather forecasters expect little rain into the end of May.
- Thus, second-crop corn and cotton seem unlikely to get a necessary moisture boost.
- We have thus put the northernmost regions on watch.
- The largest crop forecasts for Brazil are likely at risk.
- The market will track the evolution of rain forecasts for the start of June closely.
Argentina’s summer crop forecasts likely remain unchanged.
Northern Winter Crops
Multiple United States winter wheat regions remain on The Watchlist but will shrink this week.
Western HRW Wheat areas of the US Central and Southern Plains likely remain too dry.
- Weather forecasters expect little rain over the next week or so.
- So, we continue to suspect that western HRW wheat crops are struggling.
- And, that lower yields will drag down crop forecasts.
Previously soggy US SRW wheat regions have finally dried down somewhat.
- Any evidence of crop problems from the extended wet period is scant.
- Yet we have retained a ‘watch’ on the region.
- Crop issues resulting from excessive moisture can often take quite some time to emerge.
The ‘watch’ on the US Northern Plains has shrunk.
- Good rains through the west of the Dakotas quelled worries.
- Further west remains dry, though, so there was no respite from last week’s hot temperatures.
- Weather forecasters expect some rain in the region over the next week.
- The rain amounts are modest, so the dry areas remain a ‘watch’.
China’s main winter wheat regions have likely been too dry for too long.
- Weather forecasters expect drier and warmer conditions to return this week.
- Winter crops’ spring growth has already been hampered so that context will not help.
- Crops though are maturing, limiting the potential for further damage.
- Plus, the region has substantial irrigation.
- Nonetheless, we suspect some material crop losses.
Winter crops in Europe, Ukraine and Russia likely have enough soil moisture for their maturing phase.
Northern Summer Crops
The scale of summer crop concerns in North America shrink to almost nothing.
The US Corn and ‘Bean Belt’s ‘dry’ north-west got more rain than anticipated last week .
- Weather forecasters expect some further rain in this area this week.
- So much of the ‘watch’ has gone to ‘unwatch’.
- The remaining area, in western Nebraska, is much smaller.
- And, therefore, unlikely to have much impact on US crop forecasts.
The too-wet ‘watch’ on the US Corn Belt’s southwest has ended.
- This region has seen little, if any, planting delay.
- Thus, this concern, like most, has come to nothing.
The ‘watch’ on adjoining US Northern Plains and Canadian Prairie regions also shrinks.
- The western and eastern flanks of the region got, or likely get, a useful soil moisture boost.
- A chunk of the earlier ‘watch’ remains.
- The issue is still some way from reducing crop forecasts.
The ‘watch’ over the three regions is clearly much smaller. And thus so too is any influence on crop forecasts.
Some of China’s summer crop regions likely become somewhat dry again.
- This ‘watch’ region did get a little rain last week.
- Weather forecasters though, expect little rain this week and warm temperatures.
- So, soil moisture likely ends the week lower.
- Weather models are projecting more rain for the ‘watch’ region the following week.
- How those projections evolve this week will influence perceptions of this issue.
- Without more moisture, corn and soybean crops are likely to have a rough start.
- Also, the forecast horizon will soon extend to where ongoing dryness would start to concern crop forecasters.
Europe‘s north-west is flickering onto The Watchlist’s radar.
- The region is only somewhat dry now.
- However, weather forecasters expect little rain in the ‘watch’ regions for at least another week or so.
- And those forecasts include warm temperatures.
- So, chances are, these areas will be a lot drier by next week.
- Plenty of time remains for a soil moisture boost.
- So, crop forecasts are not likely to change in the next week or so.
Black Sea summer crop regions will have enough soil moisture for another week or so.
