And the under the ‘w’ are today’s agricultural trends
Here are a couple of topics related only by the fact that they share a first letter – the weather and Wal-Mart.
Grain prices were up last week when traders’ fears increased about drought in the United States plains.
They fell Monday after weekend rains in some midwestern areas were larger than expected.
Expect similar volatility in coming months as the market battles over what will be the deciding influence – dry weather or high stocks.
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
But one place where drought seems to be settling in is North Africa: Morocco, Algeria and Tunisia.
This could have a significant impact on durum prices because Morocco and Algeria are major importers, particularly when their crops run into trouble.
In early March, temperatures were averaging two to 13 degrees above normal, hitting highs of 30-35 C, exacerbating the dryness and putting more stress on winter grains.
Across the Mediterranean, Spain and Italy are also dry.
Drought there would also be positive for durum prices and good for Canadian lentil exports.
If the problems in North Africa and Italy persist, the Canadian Wheat Board’s pool return outlook for durum could strengthen.
Turning to Wal-Mart, North America’s biggest retailer is implementing policies that could have a major impact in the meat packing industry.
In Canada you can buy nonperishable foods, but in the United States, the chain is getting into full grocery service in a big way.
But you won’t find butchers in the meat department. Wal-Mart is turning to IBP to provide it with case-ready beef, and it plans to eventually have beef in all 721 supercentres and neighborhood markets.
Case-ready means the meat has been cut into individual portions and put in airtight packaging ready for the cooler.
It is believed Wal-Mart is working on a similar deal with a major pork packer.
Packers will have to build or convert plants to provide case-ready meat and they’ll also have to meet Wal-Mart’s demands regarding quality, low cost and just-in-time delivery.
Given Wal-Mart’s influence on the retail market, it is probably only a matter of time until most grocery store chains follow suit.
It is hard to say how this will affect cattle producers.
Perhaps the Wal-Mart policy of everyday low prices and few sales will create a more consistent price structure for wholesale beef.
The consistency and food safety of case-ready beef might also attract more consumers to beef.
