47 Follow us on @PrairieFarming Better Farming | July/August 2024 Moe’s Market Minute WEATHER SCARE DRIVES GRAIN MARKETS Despite above-normal precipitation, deficits persist across the Prairies. By Moe Agostino & Abhinesh Gopal Seasonality during the cropping season is invariably associated with the early weather tantrums that impact the crops and throw “seeds” of doubt into the market and the producers’ minds as to what the eventual crop size may be during fall harvest. Each year is unique as it brings with it its own set of variability and nuances in terms of weather and crop performance during the various crop stages. 2024 is no different and the 2024-2025 cropping season was off to a volatile start this spring. It was not just about United States (U.S.) planting delays from too much moisture, but also dry weather in central Brazil, flooding rain in southern Brazil, crop bugs in Argentina, frost and dry weather in southern Russia, and heavy rains in France with some flooded fields. Since the Russia-Ukraine war broke out in February 2022 and the Black Sea grain deal was signed in the summer of that year, cheap Russian wheat had been undercutting global wheat prices, which fell to a four-year low. Despite various weather and production hiccups in the U.S., Canada, and/ or the European Union (E.U.) since summer 2022, wheat values had been left for dead. But we were one crop failure away from much higher prices and a Russian production hiccup was the recipe for a wheat rally (given that they are the largest global producer and exporter). It was not a matter of if but when, and since early March, Chicago wheat futures surged by 33 per cent to a nine-month high since mid-May. This move was fueled by managed money funds (speculative funds) going from a huge net short position of -56,326 contracts in Chicago wheat futures and options to an even position since mid-May. With global wheat ending stocks at a 17-year low, production issues in Russia, U.S., and/or Europe would only add to the tightness. Many market analysts had started in mid-May to lower Russia’s 2024-2025 wheat crop from 93 million metric tons (MMT) to 85.7 MMT (down by 7.3 MMT) as frost and dry weather had impacted about 10 per cent of the crop. But World Weather Inc. was forecasting that the production loss due to dry weather could be many times more than the frost damage. Some private estimates had gone as low as 81 MMT and that compares to the United States Department of Agriculture’s (USDA) May forecast of 88 MMT. Russia is not the only country struggling with production issues. In India, the second largest global producer (but also the biggest global The market perceives the global grain supply to be in jeopardy, and supply estimates have been tightening. Tracy Miller photo
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