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Erin Ehnle Brown / Grand Vale Creative LLC

Weather changes bring pressure to agriculture markets

Crops have had a tumultuous season in the U.S. this year. Starting with late planting of the corn and soybean crops, issues have continually come up that have shifted expectations for major crops.

Spring wheat harvest was delayed and eventually stopped. A wet spring in the Corn Belt was directly opposed to the dry conditions in the Northern Plains and Canadian growing areas. Partly due to weather and partly the later development, but harvest of corn and soybeans is now well behind. As a result, there have been some rallies throughout the growing season with production questions mounting.

Last week, there seemed to be a shift. There had been a break in the weather allowing for good harvest progress in the Corn Belt (primarily on soybeans). The small amount of spring wheat left to harvest was left uncompleted. Cold and wet weather are hitting over the weekend, but the question was for the early part of November: will it stay wet or not. Wet weather means the last few weeks of possible harvest activity would be slowed or not done. Dry weather means a last push can allow farmers to harvest what they hoped to.

The latter case is what is in the forecast into the middle of November. This should allow for soybean and corn harvest to wrap up, alleviating some market worries of a total crop shortfall at the end of a volatile growing season.

Wheat

Wheat markets have turned lower after staying supported through the fall. Winter wheat planting in the U.S. is over three quarters of the way complete. The U.S. Department of Agriculture reported its first crop ratings at the national level. The crop is rated 56% good or excellent compared to 53% a year ago. Conditions in the fall have little correlation to final yield, yet the market does pay attention. Globally there has been some pressure, as European futures turned lower. Russia is facing some quality issues that have been raised by trading partners. However, demand is still strong for the cheaper Russian supply.

Durum

With the rally in the wheat market slowing, so too has the rally in the durum market. Prices have been comfortable holding at the recent highs, but without fresh news on supplies to get the market moving again, look for steady prices in the coming weeks.

Canola

The canola market has turned lower. Though not quite to the lows hit in early September, the market has given up all of the gains made earlier in the month of October. Weather during the harvest season has not been very favorable, and delays have left a lot of the crop out in the field heading into November. In September, Statistics Canada pegged the canola crop at a disappointing 19.4 million metric tons, but this estimate will likely drop in the December outlook. Then why is the market lower? The ongoing diplomatic issues with the previous top trading partner China have limited export demand for several months. As a result, pricing has backed off, even in the midst of harvest weather problems.

Pulses

Pulse markets have been firmer, even with potentially lower demand from India. China's demand for field peas has been very strong, with imports during August up from the previous month by over 140% (with Canada the single, largest origin source).

Mustard seed

The outlook for the 2019-20 mustard seed crop show a tightening of supply, according to Agriculture Canada. Planted area is thought to be just 141,000 hectares compared to 161,000 a year ago. As a result, production should drop 30,000 metric tons from last season. Ending stocks will drop by about 20,000 thousand metric tons.

Barley

Barley prices have been under pressure for several weeks. Expect this trend to continue into the winter.