While sun and rain are making grain on the Canadian Prairies, they’re also shining or showering on prices.
But frequently, it’s not the weather here that gets the grain trade sweating or
shivering.
It’s the weather around Illinois, home to the price-setting Chicago Board of Trade, that can be felt all the way up to Winnipeg.
This summer, the weather gods of the U.S. Midwest are being watched a little bit closer in Western Canada because the weather here is normal.
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July saw below average temperatures, August came in with near to slightly above average temperatures and September built on this warming trend with well above average temperatures for the month.
Bruce Burnett was watching weather for the Canadian Wheat Board during the hysterics of the 1988 drought and the 1993 monsoon.
“To have one (summer) sort of drive up the middle is somewhat refreshing, in a way, I guess,” the analyst said, reflecting on his task.
The last few years have been generally cold and wet. Crop maturity was often a concern, but not this summer.
“Having remembered a lot of hotter, drier, warmer-type summers, this is a little more typical of the Prairies than what we’ve experienced over the last number of years,” Burnett said.
There’s no big weather conspiracy theory, like ocean temperatures or trade winds or volcanic action, to explain the lovely weather.
Rain, rain, come again …
And while many farmers in Manitoba revel in great growing conditions, farmers north of Edmonton rue the day they first saw rain. And in parts of southern Alberta and Saskatchewan, the only clouds around are from pickups kicking up dust.
At the Winnipeg Commodity Exchange, traders build weather and yield concerns into futures prices at this time of year.
Trader Don Roberts says November canola futures, in the $354 per tonne range on July 31, include a small premium on the chance of crop-wrecking weather.
The price would be higher if there were fewer acres or poorer conditions, he said.
“In the Canadian markets, I don’t think it (weather) has really been a significant factor,” said Roberts. “Where your big concerns for weather now are in the U.S. Midwest.”
Corn is coming to the end of its critical pollination period, and soybeans are entering an important stage.
“August generally is the big month for soybeans because that’s when they’re setting pods,” Roberts said. “Hot and dry can hurt when you’re filling the crop.”
A dry stretch in central Illinois recently pushed prices higher in Chicago, with ripples buoying prices in Winnipeg. Then rains brought it all back down. Now prices are climbing again due to the heat.
U.S. weather buffers whatever is happening on the Canadian prairies, said Roberts.
“There’s always that hesitancy in our market, because we’re a smaller market, that through the summer time, we sort of keep pace with the U.S. market.”
Barley crop threatened
However, Canadian weather can play a role. On July 24, Calgary markets analyst Errol Anderson was keeping his eyes on thirsty barley in the southern prairies, which he said needed rain within 10 days.
“We could see a made-in-Canada rally in Winnipeg, even though there’s a reasonably good looking corn crop coming up in the U.S.”
He said southern Alberta feedlots had already pushed prices up by five cents a bushel last week, and he was expecting another 15 cents without rain.
But Anderson acknowledges the U.S. Midwest has 10 times the clout in the markets.
“Canada truly has to be stressed before we go up.”
