48 The Business of Prairie Agriculture Better Farming | July/August 2024 consumer), wheat reserves in warehouses as of May 1 were down by 10.3 per cent year-on-year to their lowest level since 2008, making it a 16-year low. More fuel could be added to the wheat price rally if India decides to start importing wheat from around the world. France this year experienced one of its worst starts to the wheat growing season in four years. A poor stretch of fall weather is believed to have reduced French wheat acres by nearly 10 per cent already, and we could see further reductions after a cold, wet start to the spring increased the likelihood of abandonment. In early May, the French 2024 wheat crop was officially rated as 63 per cent good to excellent, which was 30 per cent below the prior year’s rating at the same time and the worst since 2020. Too much rain in the Eastern Corn Belt took a toll on the 2024 U.S. soft red winter (SRW) wheat crop, and the USDA reduced their SRW wheat production outlook in their May crop report by 106 million bushels year-onyear. While much of the reduction in production was attributed to lower acres, the door could now open to greater issues if we were to start seeing yield reductions. Jumping to the opposite hemisphere, southern Brazil floods and heavy rains this year – the worst situation for the region in 80 years – prompted cuts to the 2023-2024 Brazilian soybean crop. The flooding in Rio Grande do Sul is thought to have reduced the soybean crop outlook there by at least two MMT, if not more. With still a quarter of the Brazilian soybean harvest yet to be completed as of mid-May, many of the soybean pods had split open and the seeds had sprouted, turning mouldy with additional losses to flooded soybeans in storage expected. On the other hand, dry weather in south-central Brazil could shave the second season safrinha corn production outlook. Argentina’s 2023-2024 corn crop has also been hit with too many crop bugs. In the U.S., heavy rain helped replenish some of the drier regions of the Corn Belt. The rainfall was welcomed throughout the growing season, but the frequency of rainstorms was a problem for planting the 2024 crops. U.S. corn planting in mid-May at 49 per cent complete was the fourth slowest in 25 years as excessive rains prevented the planters from getting into fields. Despite the excessive rains, many growers were able to squeeze in a good chunk of planting during their small windows of opportunity. But there were some parts of the U.S. that were not able to see a wheel turn, and it was likely only by the end of May or early June that they got some serious planting done, like in 2019. Many of the U.S. farmers that were done with planting also experienced flooding, and 10 to 15 per cent of the fields were deemed to require replanting. It’s been a less-than-ideal planting season. At the end of April, 61 per cent of Canada was classified as abnormally dry (D0) or in moderate to exceptional drought (D1 to D4), including 75 per cent of the country's agricultural landscape. Meanwhile, 95 per cent of the Canadian Prairie region was classified as abnormally dry or in moderate to exceptional drought, including 99 per cent of the region’s agricultural landscape. Precipitation in spring across Manitoba was generally above normal, with much of the province receiving more than 150 per cent of normal precipitation in April. In Saskatchewan, warmer than normal temperatures over much of the province had provided an opportunity for an early start to the 2024 crop year. The Canadian Drought Monitor commentary at the end of April said that the northern parts of the Prairie region experienced the warmest temperatures on average. Central Ontario and Quebec, as well as much of the Prairie region, received more than 150 per cent of normal monthly precipitation in April, while northwestern Ontario and central British Columbia trended drier than normal. However, despite the above-normal precipitation in April, longer-term deficits persisted across the Prairies. Multi-year precipitation deficits remained the concern as very low snowpack was reported throughout much of Western Canada. Frequent rains and wet soils across Ontario have slowed or prevented field work. At least 141 wildfires have burned in Canada since mid-May, with most of them being in Alberta and British Columbia. Of those fires, at least 37 were out of control. Wildfire smoke travelled south of the border affecting much of the U.S. Midwest, from Montana to Wisconsin and especially Minnesota. The smoke in Iowa could cause a potential repeat of 2023 as a haze effect. Last year, wildfires were timely in the month of June as the excessive carbon dioxide from the smoke that drifted south from Canada was believed to have provided an extra boost to the 2023-2024 U.S. corn crop. Will there be a repeat in 2024? This year’s global weather issues have been making managed money funds anxious, forcing them to cover their massive record short position in grains and oilseeds that they had amassed through much of 2023 and the first quarter of 2024. The market perceives the global grain supply to be in jeopardy due to multiple issues in various geographies, and supply estimates have been tightening, reflecting the bleaker outlook. During spring and summer, the funds can go long and if they think there is a problem with supply, farmers could get a good chance of selling at higher prices. As the old saying goes, “demand markets need to be respected while supply rallies need to be rewarded.” BF Moe’s Market Minute MOE AGOSTINO & ABHINESH GOPAL Maurizio (“Moe”) is chief commodity strategist with Farms.com Risk Management and Abhinesh is head of commodity research.
RkJQdWJsaXNoZXIy NTc0MDI3