When will the run of global good weather run out?

Rain this week in the United States southern Plains and the Midwest is putting to rest for now concerns about drought in American winter wheat crops.

Winter wheat crops in Europe, Ukraine, and India are all said to be in good shape. Rain in Russia might not be enough to sustain another record crop, but so far there is no concern about a production disaster.

The wheat story on page 13 shows that there is a glimmer of hope that the oversupply situation might moderate in 2017-18.

The International Grains Council forecasts 2017-18 wheat production at 735 million tonnes, down from 752 million this year.

That means production would fall short of demand and ending stocks would shrink but not to a level that would suggest a recovery to the price levels of a few years ago.

With ample supply of grain and oilseed and weak crop prices globally, we wonder what could happen to change the dynamic.

Can we expect to continue to have big harvests in the most important production regions?

Even with a changing climate that doles out more weather extremes, we have not had serious global production declines for years.

In global wheat production, we’ve had four consecutive great years. The past 12 months have been particularly impressive with record production in Russia and Australia, the second largest crop in 20 years in Canada (albeit poor quality) and above average crops in the U.S. and Ukraine.

Global wheat production in 2016-17 rose to more than 751 million tonnes, up 15.8 million tonnes from the year before.

We have to look back to 2012 for the last bad production year in wheat causing a year over year decrease in production. Russia and Ukraine suffered a severe drought that followed on the heels of a poor crop in that region in 2010.

There have been weather problems more recently around the world, but not of a scale that seriously threatened global markets.

Last year, late-season dry weather trimmed Brazil’s soybean crop and deeply cut its corn crop.

El Nino dryness hurt palm oil production in Indonesia and Malaysia last year, resulting in a year over year decrease in global production.

In 2014-15 and 2015-16 India’s monsoon fell short, forcing it to increase pulse imports, but large domestic stocks of government-owned wheat saved it from needing to import huge amounts of wheat.

However, there was nothing like the series of weather problems of the 2000-07 era that slashed global wheat and corn production even as the booming U.S. ethanol sector was fueling rapid demand growth.

At the other end of the scale, we’ve now had several years of relatively benign crop weather resulting in rising year-end stocks and falling crop prices.

Are we due for a weather problem? It is impossible to tell.

But if every year is a gamble against the weather, I’d have to say that the run of weather luck would have to run out eventually.

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