After a two-day breather late last week, crop prices rose again July 10 as the footprint of hot dry weather in North America spread out.
The stress on canola crops pushed the new crop futures price up, topping $530 a tonne, the highest in about a year.
Much of Saskatchewan and pockets of Manitoba have had only 40 to 60 percent of normal rainfall in the past 60 days, and some southern areas have had less than 40 percent, according to maps from Agriculture Canada.
In 2015, growing season rainfall to early July was also well below normal, but good rain in July and August saved crops, although yields were below average.
It looks like we won’t get a lucky break this year.
Temperatures moderated early this week and there was some rain with that system, but the dry heat was forecast to return by the end of the week, maintaining crop stress.
Unlike 2015, according to the long-range forecasts I look at, I see no widespread large rain accumulation in the southern parts of Saskatchewan and Alberta in the rest of July that would substantially improve the crop outlook.
The northern U.S. Plains also continue to burn up.
The upper limit of this weather rally will stretch out if the U.S. Midwest also gets into trouble. Rain accumulation in the Midwest in the past 60 days is below normal, but crop conditions until now have been OK.
However, they declined in this week’s crop condition report with the amount of corn rated good to excellent down three points to 65 percent, soybeans down two points to 62 percent and spring wheat down two points to 35 percent.
With warm temperatures and little rain in the western part of the corn belt this week, the corn market was rallying as this was written July 10.
Canola has been helped by rising soybeans, but there isn’t much support from soy oil nor the Canadian dollar.
Soy oil has been trading steady as world vegetable oil availability improves from rising palm oil production that is recovering after last year’s drought. Falling crude oil also weighs down vegetable oil prices.
As well, the Canadian dollar has rallied to around US77.5 cents as strong employment and economic data had most of the market expecting the Bank of Canada to increase interest rates this week.
A stronger loonie puts downward pressure on Canadian crop prices, limiting the gains from the weather.