Not much happens in the markets in the week between Christmas and New Year’s, so let’s talk about the weather.
You might have seen television pictures about the storms that have whipped across the United States. Damage to citrus groves and vegetable farms in the deep south has caused produce prices to soar.
However, the western plains of Kansas and Nebraska have little or no snow cover.
This has left the winter wheat crop there in danger of winterkill. The markets have overreacted to the threat of winterkill in the past so they are taking a wait-and-see attitude this time.
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But with poor seeding weather last fall and the potential now for winterkill, the U.S. winter wheat crop might come out of dormancy in less than ideal condition.
Meanwhile, South American crops have received excellent moisture.
Rain has been abundant and high yields, coupled with an increase in acreage, hold the promise of record soybean crops in Brazil and Argentina.
The rains were causing delays in harvesting Argentina’s wheat cro-10-P. While yields look good, quality has become a concern.
In the Indian subcontinent, the monsoon in the northwest withdrew sooner than expected.
In Pakistan, there is concern about the amount of irrigation water available. India’s reservoirs in the area are in better shape, but dryland pulse crops are short of moisture and will need rain in January to support growth.
Pakistan had surplus wheat to export this past year but expectations are that a lack of moisture and cuts in the use of high cost fertilizer will substantially reduce its wheat harvest this year.
In North Africa, a prime market for Canadian durum wheat, rainfall so far this season has been sufficient to support winter grains, but a drier trend was developing in late December.
Production this year is expected to be better than that of the past couple of years when drought hurt crops there.
The drought in Iran appears to be lifting. Crops are improving, but regular rains are needed to make up for two years of severe drought.
Iran was the largest customer of the Canadian Wheat Board last year, buying 3.3 million tonnes of wheat from this country as part of its overall imports of 7.3 million tonnes.
The International Grains Council estimates Iran’s imports this year will be down only slightly to seven million tonnes.
