THE WATCHLIST:
Argentina crop drop
Argentina’s summer crops close in on a widespread decline, but global supply blunts the impact. Some US HRW wheat crops need moisture with spring imminent.
AUSTRALIA
Many of Australia’s major summer crop regions have seen useful rain. Outside those areas, dryland yields are likely still declining.
WORLD
WHEAT
Northern winter wheat crops are starting to break dormancy. Growth will become more widespread as the northern spring begins. Some US HRW Wheat regions have started earlier, so the lack of moisture has started to matter. This dry area is a ‘watch’ that is modestly supportive of wheat prices.
COARSE GRAIN
Some of Argentina’s summer crop regions are now an ‘alert’. Persistent dry conditions in Buenos Aires mean widespread forecast reductions are now likely. And a larger share of production remains a ‘watch’. The issue is global price supportive, but no more.
OILSEEDS
The same dry regions in Argentina are an issue for oilseeds. The support for prices is greater because of a larger share of world production.
Southern Summer Crops
Argentina‘s summer crop issues are now split into two categories.
Firstly, the drier central and western regions saw useful rain last week. Forecasters expect a little more rain in these regions in the week ahead. The moisture gains are useful, but are not enough to end our ‘watch’ for a couple of reasons. One is that, being summer, evaporation will claim much of that moisture. And, two, subsoil moisture is limited here. The threat to yields can still be reignited quickly.
Secondly, the worries about crops in much of Buenos Aires are greater. These areas saw little rain over the past week. And forecasters do not expect much rain for another week or so. Given seasonal temperatures, topsoil will become very limited to zero. And subsoil moisture is already extremely limited. We have thus notched this region up to ‘alert’, because widespread yield decline is likely imminent.
The market will therefore be mindful of this issue. Production is material at a global scale. And, the issue is more serious for a subset of production. Healthy global supply means the issue is more likely to support prices than boost them.
Brazil’s summer crops are mostly on track to meet forecasts.
A small area in the south was an exception. Recent rainfall has boosted soil moisture here. Forecasters expect enough rain to further increase soil moisture. Therefore, the ‘watch’ on the southern parts of Rio Grande do Sul has ended. Any price impact is limited, given that this event is small and had not had any impact on forecasts.
The rest of Brazil’s crops are enjoying the benefits of earlier rainfall. The past week saw the rain subside, allaying worries about fieldwork delays. Forecasters expect further rain over the next week or so, but not enough to create widespread fieldwork issues. That context means crop forecasts are unlikely to decline. Large crops from Brazil support global supply, absorbing the impact of possible losses elsewhere.
Australia’s major summer crop prospects are uneven after recent rainfall. Most Queensland regions got enough rain to staunch dryland yield losses. NSW and the immediately adjacent Queensland regions receive much less rain. Here, dryland yields have likely declined further. Forecasters expect little rain in that latter region over the next week or so. Still-developing dryland crops will, therefore, likely see yields decline even further. The lost yield will continue to boost local feed prices. Australia’s dryland production, however, is not large enough to impact the global prices.
Northern Winter Crops
Northern winter crops are still mostly dormant, but the proportion will now start to decline. Extreme cold weather remains a risk, but forecasters do not expect any extreme cold in any regions without snow cover in the week ahead.
Western US Hard Red Winter Wheat regions remain very dry. Forecasters do not expect that to change for another week or so. Warmer temperatures had nudged crops out of dormancy, but the rise will be inconsistent. Crops here need moisture, but the issue is not yet urgent. This area, therefore, remains a ‘watch’. The issue is most likely only a supportive factor for prices.
Southern Winter Crops
Monitoring will resume in the southern autumn.
Northern Summer Crops
We’ll resume monitoring in the northern spring.
