Rain – or lack of it – has dampened projections for old-crop wheat returns, but perked up prospects for new-crop durum.
Weather will continue to be the driving force in wheat markets in coming weeks as buyers and sellers try to pinpoint how much exporters will have to sell this year.
Traders have kept an eye on dry conditions in the United States winter wheat growing region all winter, said Canadian Wheat Board marketing manager Don Bonner.
But in March, Kansas received more than twice the normal amount of rain, replenishing its topsoil and improving crop conditions.
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Most of the rain has fallen in the last two weeks of March, with more forecast, said Bonner.
Without the impending threat of drought, May wheat futures prices have dropped as much as $7 per tonne during March, said Bonner. The wheat board’s latest outlook for 1999-00 wheat shows forecast returns down $1 to $5 per tonne.
But the U.S. corn belt is still dry, lacking subsoil moisture, noted Bonner.
“Certainly they’re more vulnerable to a shortage of moisture,” he said.
As long as that region lacks moisture, Bonner expects wheat markets to continue to react to the weather.
In durum markets, dry weather in North Africa has perked up price forecasts slightly. North African countries are major durum buyers.
The wheat board’s forecast for No. 1 durum with 13 percent protein for 2000-01 is $184 to $214 per tonne at port position, up $3 a tonne from last month.
Bonner said this region will be key to watch during the next four to six weeks.
The durum crop in North Africa had a head start this year with good rains in November and December. But since January, Morocco and West Algeria have received little rain. The durum crop in the region is at the jointing stage, with harvest expected in May.
“The greenness of the crop just isn’t there,” Bonner said. “Their crop has certainly taken a hit so far and lost significant yield potential.”
In the current crop year, drought in North Africa helped rescue durum from what originally appeared to be dismal prospects.
So far, conditions for the new crop are worse than they were this time last year.
Bonner said the North African situation may help support durum prices down the road.
But he said the huge durum crop in North America may cap the upside potential for durum prices.
Canadian farmers may plant 30 to 40 percent more durum than they did last spring, said Bonner.
Altogether, Canadian and U.S. durum production is expected to top the eight million tonne mark, which traditionally signals a downturn in durum prices.
It’s unlikely the wheat board will accept all durum grown this spring for delivery in the 2000-01 crop year, said Bonner, unless it decided to sell into lower-priced markets it usually avoids.
Old-crop durum forecasts have dropped $1 to $4 per tonne because of recent aggressive competition from U.S. exporters.
Old-crop prospects may still take a turn for the better, depending on the severity of drought in North Africa, he noted.
And it’s still early to make production estimates for North America.
Currently, the durum-growing region of the Prairies is dry. If the region doesn’t get some good spring rains in the next few weeks, there could be concerns about subsoil moisture for seeding and establishment of the new durum crop, said Bonner.
“We don’t know what exactly the weather is going to do for us.”
