Rainfall to save season Winter crops need wetter May
BRING on the rain.
With any luck, as this hits the press some much-needed rain has turned the season around in some districts and more is on the way for others.
After an alarmingly dry April, we’re all hoping for a better and wetter May.
But it’s not just us. If we looked around the globe, farmers everywhere are getting nervous.
Starting in South America, Brazilian corn growers are looking skywards as rains seem to have turned off a month earlier than usual on their second crop of corn.
Rains that usually fall into May seem to have disappeared in early April and many have sliced a lazy 5mmt or more off the later crop.
This alone wouldn’t be a disaster but it comes on the back of a poor Argentine crop and less than ideal planting conditions in the US.
Crops there are finally getting in but April was far too cold for early planting and many crops there are two to three weeks later than they have been the past few years and this creates anxiety about the potential for crops to be pollinating in the hottest parts of summer.
Also elevating anxiety, there are chances the rest of May could be warmer and drier than average. Early days but not ideal.
Hard Red Winter Wheat crops in the US are at best described as “hanging on”. The recent wheat crop tour there called for yields well below average and there is a high probability that abandonment will be an issue if there are no significant rains in the next two weeks.
Also on the watch list right now is the Russian wheat crop. Last year Russia had a cracker and produced 82mmt (or more), which saw her exporting more wheat than ever and for much longer into the campaign then we are used to, a significant reason for the flat world market the past six to 12 months.
Here, April rainfalls have been disappointing and May hasn’t started any better. In fact, we’re about two weeks from hitting the panic button.
Many are already calling this year’s crop 7mmt less than last season. While not a major problem until now, Aussie growers are all too familiar of what six weeks of no rain can do to yields when you break out of winter and things start to grow.
Russian crops aren’t any different and if a dry April turns into a dry/warm May, then it’s absolutely “game on” in the wheat market. In fact, it would be fair to say the early concerns for the Black Sea crops, coupled with the problems in the US, were the driving factor for last week’s strength in global and local wheat prices.
We don’t even need to mention our slow start here to feed the market bulls, there is already enough to keep them going for now.
The recurring theme for the past four years has been big crop after big crop keeping global stocks burdensome. Rallies have been few and far between but maybe 2018 is set to be a game-changer.
While global stocks are heavy, no doubt there is a disproportionate amount of these stocks for wheat and corn sitting in China. And once they’re in China, we tend never to see them again. It is highly unlikely China will export them to the world, even if there was a price shock.
What hasn’t had airplay over the past four years is that there has been a corresponding boom in global demand and if we see a few of these production issues build, then this enormous demand base will start to get nervous – $4 corn and $5 wheat will then look pretty cheap if two or more of the above develop into full-blown issues.