When it comes to weather, anything can happen, which makes forecasting
world crop production difficult.
But the Canadian Wheat Board’s weather analysts think this year’s world
wheat crop will again fall short of world demand, and that should be
good news for farmers.
The board is forecasting total world production at 585 million tonnes.
The board estimated last year’s production at 580 million tonnes.
“That’s a pretty low year-on-year increase, and it’s still below the
increase in the rate of consumption,” said Burnett.
Read Also
Saskatchewan, Manitoba sign Arctic Gateway deal
Saskatchewan, Manitoba and Arctic Gateway Group have signed an MOU to strengthen trade through the Port of Churchill.
That means more wheat is being eaten than grown, a trend that is
beginning to lower the big world stocks that have depressed prices for
years.
“It points to a tighter wheat supply,” said Burnett.
“Hopefully there will be a price response to this at some point. There
has to be.”
Wheat stock shrinkage will be the result of several conflicting factors
around the world rather than a single major dynamic, say most analysts.
They are now watching the quality and yield of winter wheat crops soon
to be harvested in the northern hemisphere, the condition and outlook
of spring crops that have just been planted, and the seeding conditions
of winter wheat crops being planted now in the southern hemisphere.
Burnett said the United States Department of Agriculture is forecasting
the smallest winter wheat crop since 1967, based on poor conditions
over the winter and into spring.
Analysts will be monitoring the quality of the wheat as well as the
yield.
Quality is still the wild card, but there’s no chance of the yield
increasing significantly.
“There’s not too much chance of a recovery,” said Burnett.
The American spring wheat crop is in generally better condition than
the Canadian crop.
Recent rains in the Canadian Prairies were shared south of the border,
generally helping the crop but in some areas causing flooding and crop
damage.
Australian farmers are dealing with dry soils, which has led the
country’s official crop forecaster to sharply downgrade yield
expectations for the winter wheat crop being planted.
But farmers have weeks more in which to plant, so a timely rain could
change the situation dramatically. Most analysts have not set in stone
their lowered expectations.
Last year’s generally bad wheat crops are not being repeated this year.
Excellent conditions are leading to a record harvest.
“They had excellent seeding conditions, the rains were timely but not
excessive,” said Burnett.
Durum crops are now being harvested in Italy and Spain, while northern
European wheat will soon be ready for harvest.
Last year Russia had an excellent harvest of 47 million tonnes, the
result of perfect growing conditions. But this year the crop is
suffering.
After excellent autumn rains, dryness has settled over most Russian
growing regions. Winterkill also affected the winter wheat crop in
April and May.
“The only thing holding them on is the good soil moisture from last
year,” said CWB weather analyst Guy Ash.
The USDA is predicting a Russian crop of only 41 million tonnes.
Weather is good in Argentina, but farmers have been hurt by the
country’s economic woes, which stalled their seeding, said Burnett.
“It just looks like farmers are paralyzed by the economic situation,”
said Burnett.
“Adverse weather conditions obviously affect plants, but they haven’t
had bad weather this year. But the farmers still aren’t planting a
crop.”
There are still weeks to go in the Argentine planting season, but if
acreage falls significantly lower than usual, that would be good for
wheat prices, Burnett said.
Based on all these factors, many of which could change, the CWB is
forecasting a world wheat crop of 585 million tonnes, which is five
million tonnes less than the USDA is expecting.
Dwayne Lee, another CWB analyst, said markets will now turn their
attention to spring wheat crops developing in the northern hemisphere.
Any change to the size of world wheat stocks will occur there.
“There’s three months to go before it’s in the bin, so a lot can
happen,” said Lee.
