KANSAS CITY, MISSOURI, US — Weather pattern changes in North America during the first week of July grabbed headlines, but not in a bullish manner. US weather that had been a little tenuous during late June suddenly improved with timely rain reaching some of the driest areas of the Midwest. How long the improvement lasts now will be the big debate for the summer. In the meantime, Europe has seen some bouts of dry and warm-biased weather and soil moisture is a little low for many crops. The situation in Europe is expected to deteriorate further into the middle of July.
For a while in the late spring it looked as though the world’s grain supply was going to be seriously threatened in 2022 because of drought talk in the United States, dryness in parts of Europe, some restricted soil moisture in Russia’s Southern Region, dryness in the North China Plain and trouble with India’s monsoon beginning normally. However, the situation changed considerably as June came to an end. Rain started falling more beneficially in India and the dryness in China disappeared. Europe also received some timely rain that likely saved the late winter crops in France and a few areas to the east across Germany and Poland into the Balkan Countries.
One of the most market moving weather changes occurred in the first days of July across the US Midwest where a few nights of thunderstorm clusters moved across the northern Plains and into the Midwest. The precipitation waves brought topsoil moisture up from the very short category in some key production areas to the adequate and slightly excessive levels. The relief was most important in Indiana, Ohio, Kentucky and parts of Illinois where late spring dryness was stressing crops as the moisture sensitive reproductive phase of corn development began.
Just like clockwork, the timely rain in key US crop areas of the Midwest occurred just as tasseling and silking began for corn. The first three weeks of July were expected to be most important for corn pollination and the month started off with dryness relief for more than two-thirds of the Midwest. Sufficient soil moisture and precipitation was present to at least support a good start to pollination. Follow up rainfall will still be quite important for corn and soybeans throughout the northern Plains and Midwest during the second half of this month and on into August. The production guessing game is not over since there is still much more to the growing season left, but creating corn kernels is the most important step toward making a crop and the US weather turned at just the right time to improve production prospects — at least for now.
The changing US crop weather occurred during and just shortly after improvements began in China, India and parts of Europe. That left agricultural future prices no place to go, but down especially with a little help from macroeconomics. Much premium left the marketplace in early July because of these changes, but as noted above the summer is only beginning and there is plenty of time to speculate further over world grain production.
Australia’s wheat, barley and canola production potential still looks very good with this year’s planting and establishment occurring quite well. Canada’s problems with wheat, barley, oats, canola, corn and soybean planting in the spring largely have disappeared and recent crop development across the Prairies has been very good. Some abandonment was necessary in the wet areas of Manitoba and eastern Saskatchewan this spring, but the losses were not suspected of being very large compared to last year’s devastating drought.
Weather must continue good around the world over the next few weeks to keep production potentials running high enough to reduce concern over world grain shortages as low as possible.
US weather is still poised to finish dry this summer. Late season crops like soybeans and sorghum may struggle with late August and September moisture shortages, but if a few more timely rain events can occur later in July and early August corn may yield relatively well. World Weather, Inc. still believes rainfall in the central and southern Plains and west-central and southwestern Corn Belt may become a little too restrictive later this month and in early August resulting in some moisture stress for a small part of the nation’s corn and soybeans. The largest production threat, though, will come to soybeans because of August and September dryness.
In the meantime, changes in Europe are raising dryness concerns a little more significantly. Southeastern Europe was driest at the beginning of this month with low topsoil moisture in most areas from Slovakia and southeastern Poland into western Ukraine. However, the only chronic dryness was in Romania and a few neighboring areas of Hungary and northeastern Bulgaria. Other areas in southeastern Europe were catching up, but still had favorable subsoil moisture.
Weather pattern changes through mid-July will place a ridge of high pressure over western Europe causing rain to cease in France, Germany, Belgium, the Netherlands and the UK. Temperature are expected to rise greatly in western Europe as well. The combination of very warm to hot temperatures and no rain through mid-month will result in accelerated moisture losses and rising crop stress. In the meantime, eastern Europe will be cooler than usual, but rainfall is not likely to be well enough distributed to seriously improve soil moisture in the driest areas of the southeast.
The situation in Europe is not likely to prevail all summer, but enough excitement over heat and dryness will reach the news headlines and commodity trade to returning “some” market concern over world grain and oilseed production. Europe’s situation will probably not have a huge impact on market trade unless US weather turns for the worse again. If, for some reason, the US crop outlook turns again and becomes a little more threatening for late season corn and soybeans the developing situation in Europe may become more magnified and the two areas will suddenly return the world fears of expanding grain shortages.
The situation needs to be closely monitored. For now, though, World Weather, Inc. believes India, Australia and Canada will have relatively good production years. China may suffer some loss because of too much rain rather than dryness. That leaves the United States and Europe as the bigger influences on futures market trade for a while. No big disaster in production is anticipated for either region, but perfect weather is certainly not likely either.