Monday, April 11, 2011

Keeping an eye on the heavens



As we roll into mid April, the international trade is closely eyeing the heavens for any more potential bullish news that could send the markets higher. Historically the April - June window offers the most volatile price moments; be it too much rain in Northern Hemisphere spring plantings hampering sowing or too little rain in emerging winter wheat/rapeseed regions potentially downgrading crops. If there are weather related concerns over the next couple of months this could be an opportunity to sell any old or new crop grain if you missed the previous highs set in February.

The US winter wheat (HRW) crop really has been belted around like the Gold Coast Suns since it was sown last year in dry paddocks. Dry conditions have been recently exacerbated by warm hot winds drying out the crop. 32% of HRW regions are rated poor to very poor, with the key producing state of Kansas fairing the worst. No relief in rain is on the forecast , but cooler weather is forecast.

With record and near records snow depths occurring across the Canadian prairies over the winter, there has been question marks raised that the delayed snow melt (and subsequent flooding) will severely delaying their spring planting. Although some pockets in Alberta and western Saskatchewan snow cover has gone, there is a bias for wet and cool weather to prevail for at least this month, keeping growers out of the paddocks.

After some saving rain at end of February, Chinese winter wheat regions have remained dry since and are forecast to keep this bias. Significant rain will be needed later this month to prevent dryness from threatening production potentials. There is still plenty of time for significant rain to fall, but it will not take long for serious moisture stress to evolve when temperatures turn warmer.

Showers last week in Europe improved rapeseed and winter wheat in France, Germany, Poland and Ukraine (UK missed out, still too dry). March was a very dry month in Western Europe, and more rain is needed with warm weather becoming the norm. Ukraine is still very dry, whilst further east in the southern Volga region of Russia temperatures are warming up. Rapid snowmelt is currently making conditions very wet, with paddocks inaccessible.

Brazil soybean harvesting virtually done in Mato Grosso (main state), however question marks over quality will continue. March was extremely wet, 150% of normal rainfall Center West area. Rio Grande do Sul soybeans hit with very heavy rain recently, more is expected.

Argentina got heavy rain, heart of the grain belt soybeans may still benefit, pod filling winding down as harvesting begins. Buenos Aires needs rain for wheat planting which like Australia will commence early next month. The forecast is favourably wet in southern key wheat area.

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