Agricultural markets appear to have cut the link to the wider commodity and equity markets, at least for now.
Equities resumed their rally last week but most grain and livestock markets fell on co-operative weather and weak meat demand.
July weather was an improvement over the early part of the growing season and market psychology has shifted into a comfort zone. Rain in Western Canada arrived, stopping what had been shaping up to be a disaster, even though a lot of central and northern Alberta remains dry.
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Analysts are revising their U.S. corn and soybean yield forecasts upward, a reversal from this spring when late seeding and reduced fertilizer use had analysts cutting yield forecasts.
However, crops in many areas of Canada and the U.S. Midwest are still behind and farmers will need a good August and September to get them into the bin in good shape. Pre-harvest frost is a greater threat in Canada but it is not unheard of in the Midwest.
Long-term weather forecasts are not particularly reliable, but this is what the meteorologists are saying.
The Climate Prediction Centre of the U.S. National Weather Service at www.cpc.ncep.noaa.gov shows a cooler than normal August to October period for the Midwest.
Also, an El Nino is developing this year in the Pacific Ocean, warming the water temperature in the western part of the ocean, which can affect weather trends in regions, including the Midwest.
There is variability in El Nino years in the Midwest. However, in the majority of cases since the 1950s when there was a strong El Nino, the fall in the Midwest was slightly cooler than normal, according to data from the Illinois State Climatologist Office.
This does not guarantee problems for the crop there, but indicates there might be a bigger chance than normal of cold weather becoming a problem before the combines are put away.
Environment Canada issued a report July 1 at www.weatheroffice.gc.ca/saisons/index_e.html saying there is a better than even chance that much of Alberta and southwestern Saskatchewan will be warmer than normal in the July to September period. A slight probability of cooler weather in the same period exists in far eastern Manitoba. Elsewhere on the Prairies, the forecast is for normal summer temperatures.
The forecast for warm weather didn’t jibe with conditions in most of July. Let’s hope August turns out better.
