Assessing the yield impact of severe drought is grim exercise

Assessing the yield impact of severe drought is grim exercise

Saskatchewan Agriculture’s crop rating numbers for July 26 were a depressing confirmation of the toll drought and heat are taking on the province’s crops.

For canola, 51 percent was considered poor to very poor, 35 percent fair, 14 percent good and nothing was rated excellent.

That has to be the worst rating by far in the few years that the province has been putting out crop rating numbers.

It is difficult to compare this year’s crop to others in recent years.

Poor crops in the last decade were related to excess moisture, early frosts and extreme wind that blew canola swaths across fields.

I don’t mean to be Saskatchewan-centric in this column but it is the province that gives full crop rating numbers from very poor to excellent. I realize that production prospects are miserable in most parts of Manitoba and Alberta.

I think most in the industry would agree that we have not seen such a widespread hot drought since 1988.

And that is not a perfect analogy year because back then the crop mix, the varieties, yield potentials and the farming techniques were much different than they are today.

But for comparison’s sake let’s look at the 1988 drought’s effect on yields compared to the average of the previous five years.

The average canola yield in Saskatchewan that year was 17.7 bushels per acre, a 24 percent decline from the average of 23.3 bu.

The average non-durum wheat yield was a measly 13.7 bu. per acre, a whopping 48 percent decline from the average of 26.4 bu.

Clearly, drought of that scale can have enormous impacts on yields.

Searching for other more recent comparisons to help make sense of the current drought, we can turn to the annual Wheat Quality Council tour of North Dakota conducted last week.

The tour pegged the average spring wheat yield in the state at 29.1 bu. per acre, down 33 percent on the five-year tour average of 43.6 bu.

Given these examples, I would not be surprised to see western Canadian average yields down by 25 to 30 percent from early expectations.

They could be even less in some areas, but also some parts of eastern Saskatchewan and western Manitoba. As well, as parts of central Alberta have been lucky with rain allowing crops to hang on.

Just to do the math, a 25 to 35 percent decline in Canadian all wheat production would result in 20.4 to 23.5 million tonnes instead of Agriculture Canada’s original forecast of 31.4 million.

For canola, we’d be talking of crop of 12.9 million to 14.9 million instead of the original forecast of 19.9 million.

Lots of farmers here think grain prices should soar well above current levels.

The grain trade knows there is a severe drought in Western Canada but I wonder what their reaction will be when the true production declines make their way into official numbers put out by Statistics Canada and the United States Department of Agriculture?

How will global buyers of Canadian grain and oilseeds react? How much are they willing to pay for Canadian crops and how much can they substitute other crops and production from other countries?

Another unknown is the demand side of the equation. As the Delta variant of COVID-19 spreads, places that had opened economies are now forced to reimpose public health restriction.

Could this cool expectations for a buoyant global economy?

Beyond the Canadian situation, I think we will soon see other bullish revisions to global supply and demand forecasts.

We are hearing that Russia wheat yields are not as strong as expected just a month ago. And on July 30 the federal statistical service of Russia, Rosstat, pegged wheat seeded area at only 38.55 million acres, about three million acres less than the assumption held by the USDA and private forecaster SovEcon.

If accurate, that could mean Russia’s crop is about 4.7 million tonnes smaller than current thinking.

Also, excessive rain and flooding in parts of Europe are raising concerns about harvest delays and disease problems in wheat.

The floods in China’s Henan province came after the wheat harvest, which the government says was great, but I’m seeing speculation that the continuing high humidity and heat could hurt wheat in storage.

Meanwhile, the trade is positioning itself for the Aug. 12 USDA monthly update when it might adjust its national U.S. corn yield, currently at a record high 179.5 bu. per acre.

Will good yield prospects in the eastern corn belt make up for the shortfalls in the northern production region?

We also got news that there is a good chance a La Nina will reform in the Pacific Ocean this autumn and that could affect the coming corn and soybean season in South America.

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