Weather in recent weeks has not been as anomalous as some traders and producers had feared earlier this year. With that said, grain production will be down this summer in parts of Russia due to too much moisture in the eastern New Lands spring wheat production region and dryness in some of the corn and soybean production areas from eastern Ukraine into Russia’s Southern Region. Europe has had a touch of dryness this summer, too, and some decrease in grain production is anticipated. So far this summer the United States has seen a mostly well-balanced diet of rain and sunshine across its key grain and oilseed production areas.
Weather in the Canadian provinces of Ontario and Quebec has been mostly good in recent weeks, but there is concern for canola wheat and barley production in the Prairies due to a second year of drought. Weather in the Prairies seems to be turning a corner with improved weather expected in the second half of July, but will the change come quickly enough to restore production? Most likely, not.
Australia is another place where dryness has hurt the planting and establishment of many winter crops. The dryness has been most chronic in eastern Australia, where serious drought has been threatening Queensland and New South Wales production potentials for the past few months. A meager period of rain has occurred recently to stimulate a little planting and emergence, but significantly more rain is needed to bolster soil moisture more favorably for winter crop production.
Wheat conditions in South Africa are better than they have been in recent years, and some additional improvement was anticipated in the east because of mid-July rainfall. Argentina has been experiencing mostly favorable wheat and barley planting and establishment conditions. Brazil’s crops are in mostly good shape.
Even though there are obvious areas of distressed crops in the world, the situation is viewed as mostly favorable. Most of the weather-related problem areas in the world are not likely to have a huge impact on world commodity trade. Wheat stocks around the world are more than sufficient to support consumption even with Russia running a little short on production and a threat of the same from Australia and Canada.
Summer coarse grain production issues in Europe, Ukraine and Russia’s Southern region are not considered great enough to have a big impact on world supply — especially not with the United States working on another very large summer crop.
Changes in world weather are not likely to be significant for the next few weeks, and some of the problem areas mentioned above will have opportunity for some improved weather before the Northern Hemisphere summer season ends. That is just two months away for some areas. But that will be an important two months with El Niño looming in the future.
El Niño conditions are expected to evolve in the fourth calendar quarter of this year and it will last through the Northern Hemisphere winter and at least into spring 2019. The presence of El Niño eventually will raise some concern in the marketplace because of the tendency for such events to induce drought in eastern Australia wheat, barley, canola, corn, sorghum and cotton areas. The prospects for winter crops in eastern Australia are already poor, and if El Niño is going to begin in the next two months it will not take long for some fear to spread through sorghum, cotton, corn, soybean and sugarcane production areas in eastern Australia.
El Niño events often produce significantly less rain than usual in eastern Australia. The region is already months into a severe drought, and if the region is expected to be negatively impacted by drought during the next El Niño event then the weather of today is about as good as it is going to get. Eastern Australia could be on the verge of a very serious drought that could last into 2019, seriously reducing dryland crop production.
Indonesia, Malaysia and the Philippines also are on the verge of experiencing poor rainfall if El Niño is going to evolve. These three nations are always among the first to suffer below average precipitation during the early stages of El Niño development. Soil moisture and crop development has been mostly good for the summer of 2018, but how much longer that will last will be determined by the start date of the next El Niño event.
Evidence is strong that El Niño will begin developing late in this third calendar quarter of 2018. The development will continue into 2019 and the end result promises to be less-than-usual rainfall in Indonesia, Malaysia and Philippines. Dryness usually is significant enough to harm sugarcane, coffee, cocoa, rubber, tea, corn and a host of other tropical and subtropical crops produced in the region.
Similar dryness problems can negatively impact the sugarcane, coffee and cocoa production in west central-Africa. Crops in this part of the world are performing extremely well today and the trend should last for the next month or two, but after that dryness is likely to become more of an issue.
Some dryness also is expected to evolve in sugarcane, coffee, cocoa, corn and sorghum areas of Mexico and Central America during August and September.
Not all of the weather is expected to be adverse. Any El Niño tendency in September and October would help to moderate temperatures in the United States and start inducing better rainfall and soil moisture across southern portions of the nation. This trend usually prevails through the Northern Hemisphere winter and can translate into a good start to spring 2019 crop weather.
Brazil and Argentina crop weather is expected to be mostly favorable this spring and summer. A normal start to the annual rainy season is expected after last year’s delayed start. Coffee, sugarcane, citrus, rice, corn and soybean planting is expected to begin quite favorably with a good summer outlook.
North America weather may change as El Niño evolves, too. Canada’s Prairies may endure a dry and warm late autumn and winter weather may evolve. Such conditions in the Prairies will not bode well for restoring low soil moisture after the past two years of drought. In most of the United States, weather anomalies associated with El Niño tend to occur more in the summer than in the winter, but some cooler and wetter-than-usual biases will occur in the southern states during late autumn and winter.
Europe and the western Commonwealth of Independent States weather anomalies should slowly mellow out until spring of 2019 when some anomalous conditions may evolve once again.
India’s weather will not likely trend adverse because of El Niño until next summer, but producers and traders will be watching closely for signs of a poor performance of the summer monsoon in 2019.