Weather took centre stage at North American commodity markets earlier this week as expectations for another hot, dry week on the Canadian Prairies and northern plains states threatened yield prospects.
The heat also continued in Europe squeezing yields there. And lack of rain in Argentina was limiting the area seeded to wheat.
The U.S. Department of Agriculture reported late on July 28 that 60 percent of the U.S. spring wheat crop was in good to excellent condition, a sharp drop from the previous week’s 67 percent in that condition, but well ahead of last year’s 36 percent. The crop was 98 percent headed, ahead of the five-year average of 96 percent, USDA said.
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In the EU, the heat appeared to be hurting feed grain and forage production more than crops. Wheat yields are definitely off, but quality is up.
The recent upswing in the Canadian Wheat Board’s asking price for durum reflects Europe’s weather problems.
But these problems are, so far, minor and there is no talk of prices soaring like last year at this time.
Canola futures were also supported by the heat across the Prairies and more exports to China.
China’s voracious appetite for vegetable oils is one of the biggest stories in agriculture.
If Chinese demand wasn’t so strong, the big jumps in South American soybean acreage in recent years would have ruined oilseed market prices.
China’s soybean imports are expected to reach 20 million tonnes or more this year, almost double that in 2002
But China’s imports are expected to slow in September for about a month to allow its own farmers to market their soybean crop.
That will probably pressure oilseed prices especially because that is when the Americans will be harvesting what is expected to be a big soybean crop.
Another negative factor for oilseeds is the large amount – 45 million tonnes – of unsold soybeans held by South American farmers.
Producers there reserved sales earlier this year when local currencies were appreciating against the American dollar, reducing farmgate prices.
If they dump their stocks soon, oilseed prices, including canola, will feel the pressure.
But as we’ve reported, Canada should be the only country with significant exportable canola supplies so that should cushion the blow.
