It appears that the speculative frenzy that drove grains and oilseed futures prices higher in recent weeks might have run its course. Attention may return to fundamental supply and demand and the weather.
Storms in the last week brought moisture to many areas of Canada and the United States, improving growing prospects for the new crop.
In Canada, the moisture reached areas most in need in southern Alberta. Through the fall and winter, much of Alberta south of Red Deer had below normal moisture. The southwestern quarter of Saskatchewan also had less than normal precipitation, as did parts of northeastern Saskatchewan.
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Much of central and northwestern Saskatchewan got good moisture in the fall and winter as did most of Manitoba, aside from a region in the northwest. As this was written March 21, much of Saskatchewan and Man-
itoba was getting snow, including that dry area in northeastern
Saskatchewan.
In the U.S., corn and soybean areas have good soil moisture and were forecast to get more this week.
The American seeded area for winter wheat is estimated by the U.S. Department of Agriculture at 41.6 million acres, down four percent from 2004. But the crop is off to a better start this year.
In Kansas, where the crop is about to break dormancy, soil moisture is generally good and it appears there was almost no winterkill.
But Nebraska has been drier, particularly western areas. Still, the conditions are better than they were last year at this time. Rain was improving the situation early this week.
Turning to the U.S. spring wheat area, where seeding will begin in a few weeks, the western half of North and South Dakota are also dry and parts of Montana are severely dry. These areas will need significant rain in coming weeks to ensure a good start to the crop.
For Europe, last year the community produced a record crop, but a repeat performance is in doubt.
Much of France had an unusually dry fall and winter and farmers are worried about a repeat of 2003 when drought slashed production.
As the growing season approaches, traders will increasingly turn their attention to these areas and the weather across the northern hemisphere. So far, there are no serious red flags, but the weather changes, and it is a rare year that fails to spark a weather rally during the growing season.
