It appears South American crops are going to be good to excellent, barring a sudden and unexpected shift in the weather.
That is the key reason why soybean and corn futures are leading crop prices downward at the moment.
Price direction in the future will depend a lot on whether the U.S. drought continues into the spring, as Ed White’s story and a Reuters story in this section elaborate.
There is no dominating global weather phenomenon this winter, neither La Nina nor El Nino, so it is not easy to predict what to expect when U.S. and Canadian farmers hit the fields this spring.
However, several of the major winter crop regions face challenges.
The latest is the intense cold in China. That country is facing its coldest winter in 28 years, and the China National Grain and Oilseed Information Centre says the weather could hurt the now dormant winter wheat crop.
It accounts for 90 percent of China’s total wheat production. The cold is also bringing snow, which should protect winter wheat and add moisture.
However, the cold could hurt winter-seeded crops in areas where it doesn’t snow, including rapeseed.
You can find a map showing snow cover around the world by going to www.polardata.ca and click on “Canadian Cryospheric Watch.”
I wasn’t able to find many English language websites of Chinese news services or global news wires that reported on crop damage caused by the cold weather, but the main issue appeared to be damage to vegetables in the southern part of the country.
Meanwhile, a cold snap in Russia just before Christmas was said to have threatened winter wheat in the Volga region, which accounts for about a quarter of the country’s wheat production. Snow cover was light so there was little protection for the crop from temperatures that fell as low as -26 C.
Another cold wave is forecast this weekend with lows falling a little below -20 C.
The majority of Russia’s wheat is grown east of Ukraine and the Black Sea and northwest of Kazakhstan.
There is no way to know if these cold periods will significantly damage the crops in China and Russia, just as it is too early to tally loses in the U.S. hard red winter wheat crop, even though it was in the worst condition going into dormancy since the U.S. Department of Agriculture began monitoring crop conditions.
We’ll get a better picture in a few months, once the weather warms up.
Uncertainty usually lifts grain prices, and these weather problems are providing support, but we must also remember that the global wheat supply is not as tight as corn supply.
The global stocks-to-use ratio at the end of this crop year for wheat is expected to be 26 percent compared to a much tighter 14 percent for corn.
Follow D’Arce McMillan on Twitter @darcemcmillan.