THE WATCHLIST:
Is a Hard Red rain gonna fall?
US HRW wheat crops continue to decline while awaiting rain. Australia remains largely dry, with end-May rainfall forecasts now critical. Elsewhere, worries are minor.
WHEAT
Yields likely continued declining in many western US HRW Wheat regions last week. Rainfall over the past week was disappointing, missing some of the ‘losing’ areas. Weather forecasters expect useful rain in some regions this week. Again, the coverage is incomplete. Moreover, any rain that does fall is unlikely to restore yields – at best, the decline will halt. The realised amount and spread of rain will influence wheat prices this week. Other northern winter crops have adequate soil moisture and are likely in good condition.
Two other issues are on the wheat market’s radar, but not on The Watchlist. The major one is Australia‘s largely dry winter crop regions. Weather forecasters see little change to that in the week or so ahead. The clock is ticking louder for Australia’s winter crops, but there is still time for planting rain. The issue will become more urgent if there is no rain forecast for late May. Another (lesser) issue is dry-ish spring wheat regions on either side of the Canada-US border. These areas need rain soon, but the rain required is not modest.
COARSE GRAIN
Coarse grain crops continue to have no major issues. Northern summer crops mostly have supportive or better planting soil moisture. Australia’s dry winter crop regions remain on the back burner for now.
We added another area in N-E Brazil to the ‘watch’ area, but the total area remains small. And, therefore, this watch is unlikely to have any global price impact. A seam of market chatter is focusing on larger corn areas in Brazil’s Centre-West. Some of these areas have dried down, but several caveats hold us back from putting them on ‘watch’. Firstly, dry weather is the normal pattern this time of year. Secondly, topsoil moisture is low in some places, but most of those regions still have good subsoil moisture. For now, that combination does not sum to a ‘watch’ in our view. Crop forecasts are not at risk, especially given that a large chunk of Mato Grosso has high soil moisture to support yields.
OILSEEDS
Oilseeds lack any weather issues for now. Northern summer crop planting is largely supported by good soil moisture. Another strand of market chatter is looking at canola in Australia (mostly very dry) and Canada (some dry-ish regions). This discussion is not without cause, but it is too early for a ‘watch’. We expect this issue to remain nascent for now, and so not impact crop forecasts.
Southern Summer Crops
Northern Winter Crops
Southern Winter Crops
Watchlist clear for now.
Northern Summer Crops
Watchlist clear for now.
