Now that concerns about the pace of seeding are over, grain markets are drifting lower.
There is good moisture over most of the Canadian Prairies and the American plains.
Generally, the market seems satisfied with production prospects so far, but there are issues to watch.
The latest United States Department of Agriculture world production report was to come out June 11, after this was written. It was expected to cut its forecast of world wheat production by about five million tonnes.
This reflects the much smaller crops in Ukraine and Russia that we have documented on these pages recently. Also, it reflects the overly optimistic early forecast of Australia’s crop. There has been some rain Down Under, but it is still on the edge of drought.
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USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
The European Union saw dry conditions in northern areas earlier in the spring that are expected to reduce yields, but good crops in Spain are expected to help make up for the shortfall. Generally, the EU crop is expected to be close to average.
Recent rain in the U.S. Midwest corn and soy regions has helped make up for a deficit earlier. You can get a visual impression of how the Midwest’s crops are progressing from the USDA’s Foreign Agriculture Service Production Estimates and Crop Assessment Division at www.fas.usda.gov/pecad.
Click on “crop explorer” and you go to a page showing the world’s major crop growing areas. Maps illustrate recent rainfall, soil moisture and vegetation index. The latter shows how much green growth there is. You can compare current conditions to last year and a historical average.
On the May 31 map, before recent rain, the states bordering the Mississippi and Missouri rivers showed less vegetation than last year, so forecasts of bigger crops must be monitored closely. The map shows wheat areas to the west in much better shape than last year.
If you click on east Asia and check out the vegetation index, you can see the impact of the drought in China’s northeast, talked about on page 13. China might be forced to export less corn and import more soybeans, both good for North American grain prices.
Overall, grain prices are not expected to rise anywhere near last fall’s high, but there are possibilities for weather rallies this summer.
