The world urgently needs big northern hemisphere crops this year to rebuild grain stocks, but several early season weather problems have developed that could hurt production.
Seeding is going to be late in Western Canada and it looks like it could be another year of large areas of unseeded land because of excessive moisture.
It is a similar situation in North Dakota.
The U.S. Midwest is behind in seeding because of excess moisture. A wild storm system last weekend that generated dozens of tornadoes dumped snow and rain in Nebraska, South Dakota and the Midwest and delayed seeding.
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Seven percent of the U.S. corn crop had been seeded as of April 17, compared to 16 percent last year and the five-year average of eight percent.
That storm was expected to deliver rain to drought areas in the hard red winter wheat belt. The forecast pushed down wheat futures last week, but wheat prices staged a strong rally April 18, partly because little to no rain fell in the driest parts of Oklahoma and Texas and southwestern Kansas.
The weekly crop condition report issued April 18 showed the percentage rated poor to very poor in Kansas rose to 42 percent from 37 percent the previous week.
The poor to very poor rating in Oklahoma rose to 69 percent from 60 percent and in Texas it was 68 percent, up from 66 percent.
Wheat was also supported by concerns about dry weather in France, Germany and Great Britain, highly unusual in the spring. Yield potential would be significantly limited if these countries do not get a major rain by the end of April.
It is also becoming dry again on the North China Plain, home of that country’s winter wheat crop.
Ukraine is expecting a return to average to above average production after a drought-reduced crop last year. UkrAgroConsult expects exports to recover to 22 to 23 million tonnes from an estimated 11 million this year.
Russia is experiencing a cool spring that is delaying seeding. Early forecasts for Russian grain production vary from a low of 75 million tonnes to a high of 85 million. Domestic consumption is about 70 million tonnes.
The Russians want to monitor the condition of the crop so they can decide whether to end the export ban imposed last August after drought devastated the crop.
Grain exporting companies are lobbying hard to end the export ban, but a presidential election is coming in Russia in 2012 and a March report by the U.S. agricultural attaché in Moscow suggested politics would be a big influence on whether the ban is lifted. The attaché said resumption of exports might be phased in gradually.
It is early days yet and there is a lot of weather between here and harvest, but for now, a weather risk premium is justified in crop markets.
