Poor growing conditions in key production countries may spark trade opportunities

Spring wheat issues mount as drought spreads

Grains
Although not desirable, crop production problems in parts of the US, Canada and Russia will potentially generate export opportunities for Australia's grain growers.

Although not desirable, crop production problems in parts of the US, Canada and Russia will potentially generate export opportunities for Australia's grain growers.

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Global grain production challenges may open trade doors for Australian croppers.

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The Northern Plains of the United States is copping a hiding from the weather gods at present.

And above-average temperatures and below-average precipitation is forecast for the next two weeks, which is adding to the drought woes being experienced across much of the north and western reaches of the country.

Scattered showers are expected to be received across the Northern Plains this week, but these are unlikely to be enough to avoid net drying in most areas.

The ridge of high pressure that brought hot temperatures to the northern-most states last week and across the weekend is expected to return as the rains recede.

Rainfall deficits are accruing and 70 per cent of the spring wheat area is in some degree of drought.

Almost half of the belt received less than 50 per cent of its average May rainfall, and it will be in big trouble if substantial and widespread precipitation fails to arrive in June.

There is a chance of some rain if temperatures cool down.

But there is no "soaker" in the forecast, which only leads to greater and greater deficits as the month rolls-on.

North Dakota is the biggest spring wheat growing state in the US and produced almost half of the country's output in 2020.

But its crop was getting toasted last Friday due to temperatures exceeding 37°C in many areas, winds gusting as high as 50 kilometres/hour and humidity being as low as 17 per cent.

While not as extreme, the hot and windy conditions persisted for much of the weekend, which added further stress to an already struggling crop.

According to last week's US Drought Monitor Report, almost 18 per cent of North Dakota is experiencing exceptional drought conditions. This is the worst categorisation in the US drought model.

Another 59 per cent of the state is in the second-worst category of extreme drought.

According to the drought monitor service, almost 99 per cent of North Dakota is suffering from some degree of drought, and it is the state's most intense and widespread drought this century.

The drought isn't quite as bad in South Dakota, but it is still a major concern for farmers - particularly those located along the border with North Dakota.

The area suffering extreme drought conditions has decreased, but 94 per cent of that state falls into the abnormally dry category - or worse.

In Minnesota, about 13 per cent of the state reported moderate drought and 73 per cent of the state reported abnormally dry conditions - or worse.

The impact of the drought across the Northern Plains is evident in the US Department of Agriculture's (USDA) weekly Crop Progress Report.

Spring wheat conditions were added for the first time this season on May 25 and the overall good-to-excellent category debuted at 45 per cent.

That slipped two points to 43 per cent last week, which was the lowest early June rating since 1988.

This is also drastically lower than the 80 per cent good-to-excellent rating for the same week in 2020.

In North Dakota, only 31 per cent of the current crop made the good-to-excellent rating category, which potentially puts a big dent in US spring wheat production if the drought persists.

The story in South Dakota is slightly better at 45 per cent good-to-excellent.

But ratings in both states are expected to take a hit when the numbers are updated this week.

At the same time last year, the good-to-excellent ratings in North and South Dakota were 83 and 74 per cent, respectively.

There continue to be stories across the Dakotas of spring wheat that failed to emerge due to parched soils and farmers ploughing in crops and replanting with other spring grains.

In North Dakota, 97 per cent of the spring wheat area had been planted by May 30.

Nonetheless, some farmers are saying that if they don't get meaningful rains by mid-month, there will be some prevent plant declarations.

Emergence was running at 76 per cent at the end of May.

Crop conditions in the eastern reaches of the Northern Plains are much better than the Dakotas.

The USDA is calling Minnesota's spring wheat areas as 84 per cent good-to-excellent.

This is slightly higher than the 81 per cent rating on June 1 last year.

The south east parts of the state received good rains in May, but moisture deficits persist.

The dryness in the northern latitudes of the US has been building for months, and the long-range forecasters say the weather pattern appears to be setting up for a longer term blocking ridge across the Northern Plains.

But it is not only the spring wheat regions of the US that are being troubled by this system.

Just across the border, the extremely dry climatic conditions are exacerbating an already dire situation for the Canadian spring wheat farmer.

The drought conditions ridge up into Manitoba, Saskatchewan and parts of Alberta.

Millions of acres of the Canadian Prairies have inadequate topsoil and subsoil moisture levels at the moment.

The soil moisture deficits have been building following two years of below-average precipitation.

In some districts, the drought is unprecedented, with some areas recording the driest nine-month period since records began in 1895.

The Russian wheat areas at similar latitudes are also in trouble.

About 50 per cent of their spring wheat belt is suffering from an intense drought that has hampered germination and crop establishment.

The month of May for Russia's spring wheat areas is reported to have been the second driest in the past 40 years.

The potential impact on global wheat production is mounting.

If this week's weather forecasts fail to show significant relief in the 14-day runs, the price action on Minneapolis will get very interesting.

The December contract closed up US$10.50 per tonne before the weekend and has rallied US$43/t - or almost 17 per cent - since the most recent low on May 26.

If this continues, the Chicago and Kansas wheat contracts will have to get more keenly involved in the chase.

High global grain prices and rampant demand from China have put a spring in the step of farmers across the world.

While not desirable, production issues in parts of the US, Canada and Russia will potentially generate export opportunities for Australia.

We can only hope that the current winter crop production potential down under is maintained through the spring and manifests itself in another big crop for the domestic farmer.

The story Poor growing conditions in key production countries may spark trade opportunities first appeared on Farm Online.

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