Final seeded area estimates, summer weather forecasts and the continuing conflict in Ukraine are key factors driving grain markets in mid-June.
This year, question marks remain on planted acreage due to excessive rain in the eastern Prairies in Canada and the northern United States.
On the eastern Prairies some expected acreage will not get seeded because of wet conditions and some corn and soybean land will likely switch to canola and cereals.
But traders of the Chicago futures markets are most interested in the prospect that millions of acres that were expected to be seeded to soybeans in North Dakota and Minnesota will not go in. The U.S. Department of Agriculture is expected to issue its seeded area report on June 30. Statistics Canada’s planting report is set for July 5.
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Questions about seeded area and also news of strong exports helped the Chicago soybean contract reach a new 10-year high last week. It almost broke the all-time high set in September 2012.
The strong exports contributed to the USDA lowering its soybean ending stocks estimate to 205 million bushels in its monthly report issued June 10, down from 235 million in the May report. That is the tightest U.S. year ending stocks since 2015.
For U.S. spring crops in the ground, conditions are mostly favourable.
There is good moisture in the Midwest, but long-range forecasts showed strong potential for warmer and drier than normal weather in mid-June and into July. Midwest crops would probably benefit from June heat, but will need more rain in July to prosper in a hot summer.
Speaking of rain, most farmers in Alberta and western Saskatchewan welcomed a break in the drought last week and the forecast for widespread rain early this week.
Temperature forecasting models are less unified in their outlook for the Canadian Prairies. The trend of normal to a little below normal temperatures might continue for us.
In Brazil, farmers are harvesting their second corn crop, which was plagued by lack of rain in northern growing areas.
However total production might not suffer because seeded area was larger than expected.
Brazil’s crop forecaster, Conab, in its June report pegged second crop average yield at 85 bu. per acre, down from 85.6 bu. in May and 87.7 bu. in April.
But seeded area climbed by 420,000 acres resulting in an expected second crop of 88.01 million tonnes, up from 87.69 million in May.
Conab also slightly increased its estimates of the first and third corn crops, pegging total annual production at 115.2 million tonnes, much better than last year when drought and frost slashed production to only 87 million tonnes.
In a deal signed last month, China agreed to modify its phytosanitary requirements for Brazilian corn. Once details are worked out, it should allow Brazil to sell much more corn to China. Until now, China got most of its corn imports from the U.S. and Ukraine, but Russia’s invasion of the latter has cut off that source.
About 20 million tonnes of wheat and corn are stuck in Ukraine storage because it is unsafe to move it by ship.
Turkey last week hosted talks over a possible Black Sea corridor for Ukrainian shipments but Russia and Ukraine remain far apart.
While Ukraine can get only a trickle of grain out, Russia’s wheat crop and export prospects are favourable.
The USDA June report forecasted Russia’s 2022-23 production at 81 million tonnes, up a million from May and its exports at 40 million, also up a million.
Last year’s crop was 75 million tonnes and exports 33 million.
After a good spring, wheat in southern Russia is facing drier, hotter weather. If it continues it might lower yield prospects.
Hot weather is also a problem in parts of Europe, especially France.
Strategie Grains on June 9 lowered its forecast for the European Union soft wheat crop to 124.4 million tonnes, down from 126.2 million last month and 130.5 million last year.
It dropped the durum forecast to 7.4 million tonnes from 7.6 million last month and 7.7 million last year.
Hot temperatures are expected to continue in much of Europe through July.
In China, earlier concerns about the winter wheat crop have modified and more than half of the harvest is complete.
In the Southern Hemisphere, Australia and Argentina are seeding winter wheat in conditions influenced by an unusual third year of La Nina.
Dryness in Argentina might limit seeded area to the smallest in 12 years, causing the Rosario grain exchange to make an early wheat forecast of 18.5 million tonnes, down from 19 million previously and 22 million last year.
Moisture is excellent in Australia and seeded area might reach a record high. Analysts’ early projections are 30-35 million tonnes, close to last year’s record of 36 million.
