Global weather phenomena continue to have a notable impact on grain markets across the world. This week, we’ve observed a dichotomy in weather conditions with favorable rainfall in the U.S, Canada, and the EU, contributing positively to crop development, contrasted by harsh droughts in South America that threaten crop yields.
Rainfall Benefits North American and EU Grain Markets
In the United States, particularly in the corn belt’s western regions, forecasted heavy rains are expected to facilitate planting efforts next week. The western and southern parts of the Central and Southern Plains are also expected to see substantial rainfall. These showers will likely improve the overall condition of crops. While precipitation is set to decrease next week, ongoing rainfall is predicted in Texas, ensuring sustained hydration for growing crops.
Canadian prairies have been experiencing a week of heavy rainfall, replenishing essential soil moisture reserves. The weather for the upcoming week predicts drier conditions with moderate temperatures, which should expedite sowing activities.
In the European Union, crops are benefitting from periodic rainfall. However, low temperatures are somewhat slowing plant development. Despite the generally favorable conditions, Spain continues to grapple with drought, causing concern for crop prospects.
South American Droughts: A Challenge for Crop Production
In South America, the scenario is less optimistic. The dry season has started in Brazil, with temperatures in the central regions reaching a standard 30-33 °C. This rise has slightly decreased soil moisture for the second harvest corn crops. Despite this, crop forecasts remain stable, with soybean harvest estimates at 154-155 million tons and corn at 125-130 million tons.
Argentina’s situation is even more concerning. Persistent drought is impairing the sowing and rooting of winter wheat. The Rosario Stock Exchange has revised down its forecast for the country’s soybean crop by 1.5 million tons to 21.5 million tons, a significant deviation from the USDA’s April estimate of 27 million tons.
The European Outlook: A Mixed Bag
Stratégie Grains, in their May report, increased the forecast for soft wheat production in the EU for the 2023/24 marketing year (MY) by 1.1 million tons to 130 million tons, indicating a positive outlook. However, due to the ongoing drought in Spain, the production forecast for barley decreased by 1.7 million tons to 49.9 million tons. The forecast for maize production was also lowered by 0.6 million tons to 62.1 million tons, due to wet and cold weather delaying planting and potentially reducing yield potential.
Black Sea Region and Ukraine: Cooler Weather Conditions
In the Black Sea region, below-normal temperatures continue to prevail, but a decrease in precipitation intensity is anticipated to speed up the sowing of spring crops.
In Ukraine, as of May 11, 66% of the planned areas were sown with warm crops. The upcoming week’s dry and cool weather will likely permit more active sowing. It’s clear that the climatic variations across the globe are directly influencing the planting, growth, and harvesting of key grain crops, in turn, influencing the global grain markets.