Crops across the Northern Hemisphere are turning out better than expected and the increased production is pressuring grain prices lower.
In the Southern Hemisphere, prospects are also improving.
Western Australia, that country’s largest wheat producing state, has done well all season, but states in the south and east have been dry. Rain fell on the dry areas last week at the critical crop filling stage, maintaining hopes of producing a wheat crop of 21 to 23 million tonnes but regular rain will be needed during the rest of the growing season.
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Prospects for the canola market for the coming year will be strongly influenced by South American soybean crops.
Seeding is about to begin there and production is expected to storm back after sharply falling last year.
Last year, Argentina was beset with drought and farmers were battling the government over export taxes on farm commodities. Farmers there produced only 32 million tonnes of soybeans, down from 46.2 million the previous year.
The drought also slashed wheat seeding earlier this year and analysts now expect that idle wheat land will go into soybeans. The U.S. Department of Agriculture forecasts the soybean harvested area will jump to about 44.5 million acres from 39.5 million last year. With good weather, production is forecast to jump to 51 million tonnes, 19 million more than last year.
Brazil’s farmers are also expected to bounce back from drought. USDA forecasts seeded area climbing to 55.6 million acres from 53.6 million and production rising to 62 million tonnes from 57 million last year. Smaller South American growers Paraguay, Uruguay and Bolivia are also expected to expand production.
The weak El Nino now affecting global weather is expected to continue into 2010. El Ninos usually have a beneficial effect on South American
production.
USDA forecasts world soybean production this crop year will rise to 243.9 million tonnes from 210.7 million last year. Production should exceed demand, allowing end stocks to climb by about 10 million tonnes to 50.5 million after shrinking last year by the same amount.
The better soybean crops in the United States and South America will likely mean the oilseed price range, including canola, will be lower than it was last year.
