This week is full of reports that have the potential to move markets, but alas, they all are released after our deadline of June 25.
On June 26, Statistics Canada was to release its estimates of crop area, on June 28 the Canadian Wheat Board was to publish its latest Pool Return Outlook and on June 29 the U.S. Department of Agriculture was to bring out its seeded acreage and grain stocks reports.
The Statistics Canada report is likely to confirm that prairie farmers seeded less canola and wheat and more barley than had been expected in early spring.
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Since the May PRO was released, Minneapolis new-crop wheat futures have rallied about 13 percent, so the June PRO should show some gains. The strong Canadian dollar will offset some of the positive impact, but at least the loonie’s rapid rise appears to have reached a plateau around the 94 cent US mark in recent weeks.
Heavy rain that delayed the U.S. winter wheat harvest and downgraded its quality was behind the price runup. Also supporting it was drought in Ukraine, southern Russia and eastern Europe.
Dry weather was forecast this week for Kansas, allowing harvest to begin in earnest. The previous rain and damage from an April frost was expected to reduce yield and quality.
As of June 24, 22 percent of the U.S. winter wheat crop had been harvested, compared to the five year average of 36 percent.
The crop condition report fell to 25 percent poor to very poor from 22 percent the week before.
Quality is also becoming an issue in Europe where recent rainstorms have caused lodging and other problems.
This suggests that premiums for high protein wheat could rise, and Canadian producers might want to weigh the opportunity to manage their crop nutrition for protein.
Given moist conditions in most of the Canadian Prairies, farmers will also have to watch for disease.
Last week the Australian Bureau of Agricultural and Resource Economics (ABARE) forecast the wheat crop there at 22.5 million tonnes, more than double last year’s drought-reduced crop.
The report had little effect on the wheat market because it had already factored in a return to normal production in Australia.
But while the drought has broken, not all areas of Australia have received enough moisture. Heavy rain has fallen mainly in coastal areas and in the east. It has not penetrated inland into all prime crop areas and Western Australia, home to 35 percent of the country’s wheat production, has large dry areas.
These problems were reflected in the ABARE forecast, which was down from its preseeding forecast of about 25 million tonnes.
But the forecast might have to drop again if regional dryness persists.
Also on the periphery of the wheat market radar screen are reports of drought in parts of northern China affecting wheat and corn crops.
Weather will remain the key market mover in coming weeks.
Recent rain in the U.S. eastern Midwest has, for now, calmed nerves in the corn market but timely rain is needed to carry the corn and soybean crops to harvest. If a dry and hot trend returns, those markets will again take off.
