Too little of a bad thing

Argentina’s crop worries are not yet at a scale to lift prices much.

AUSTRALIA

Australia’s summer crops are stressed ahead of February rain.?

WORLD

Argentina’s summer crops remain the major weather issue.? This issue can evolve, for better or worse, this week.?

COARSE GRAIN: ?Corns bull run has started to run into some resistance.? Some are cashing in their hefty long positions.? And Brazil’s excellent corn crop prospects are also a headwind.? Question is, can those two be outweighed by Argentina’s crop worries?? We suspect not. ?Or at least not yet.? Argentina corn crop forecasts would need to be 10mmt (~20%) lower to ‘move the needle’.? Analysts are unlikely to get close to that soon.? And even that inventory fall would still only result in middling supply conditions.? More likely, Argentina’s crop worries are a supportive factor in a context where prices remain relatively low.?

OILSEEDS:? The same might be said for Argentina’s impact on oilseed prices.? Analysts are, for now, unlikely to make hefty cuts to their Argentina soybean estimates.? And even if they did, supply conditions would not end up ‘tight’.? The market might have other matters on its mind this week.? The US tariff announcement likely refocuses attention on China’s response.? Markets will fear that China will again target US soybeans in their response.? This trade context would dilute Argentina’s impact.?

WHEAT:? Wheat still has few large-scale weather worries.? Many northern crops remain exposed to cold.? Weather forecasters?do not though expect extreme cold in vulnerable regions. ?Both India and North Africa likely remain too dry to support healthy crop emergence. ?These two alone are probably not enough to lift prices by much.?

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AUSTRALIA:? Summer is indeed hot

Australia’s summer crops are likely stressed but perhaps not unusually so.?

• Forecasters expect little rain and high temperatures in summer crop regions.
• That outlook though is the ‘norm’ this time of year.?
• February is usually wetter but the rain in these regions is usually back-loaded.?
• Comfortingly, seasonal rain has begun to the north.?
• For now, somewhat hotter-than-usual conditions are likely stressing non-irrigated crops more than usual.?
• We have consequently put a ‘watch’ on a large share of Australia’s summer crop regions.?
• Importantly, the worry is confined to non-irrigated crops.?
• That qualification limits the scale of the worries despite the wide ‘watch’ area.?

WORLD: Too little of a bad thing

?Argentina’s summer crops are set to become more troubled.? Brazil’s summer crops remain a hefty offset.? Northern winter crops continue with no market-material worries for now.?

Southern summer crops

Brazil’s soggy summer suggests large crops but somewhat scrambles their schedule.?

• Weather forecasters expect the abnormally wet conditions to subside over the next week or so.?
• All that moisture likely underwrites hefty crops.?
• Soggy and boggy conditions though also have downsides.?
• Soybean harvesting is behind ‘plan’, meaning a slow flow to market.?
• Slow harvesting also means slow planting of second-crop corn.
• Later planting can mean these corn crops develop behind schedule.?
• And, if far enough behind, these crops can be vulnerable during the later dry season.?
• This schedule shunt is likely modest so far. ?
• And forecasters do expect the weather to allow harvesting and planting to speed up.?
• Moreover, one of the lesser-known commandments is “thou shalt not bet against farmers”.?
• Market worries about Brazil’s crops, consequently, remain minimal.?
• And, chances are, all that rain is going to make a lot of grain.?
• So, the market’s view likely remains well-anchored around large Brazil crops.?

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Argentina’s summer crop yields likely remain an influence on markets.?

• The past week saw rain in much of central and northern Argentina.?
• The south, especially Buenos Aires, missed out. ?
• Netting that out, the ‘state-of-play’ is better – but likely only temporarily. ?
• Weather forecasters are expecting sub-par rainfall and warm-to-hot temperatures.?
• So, crops will increasingly fall behind in their race with evaporation.?
• The Watchlisted regions cover enough production to make these worries world-scale.?
• The scale means worries about Argentina’s crops will remain an influence on markets.?
• And also that weather-forecast evolution in the week ahead can be influential.?

Northern winter crops

Northern winter crops remain at risk of killing cold.? The risk of extreme cold remains low.?

Ukraine and Russia’s winter crops’ have unusually little snow cover for this time.?

• Winter wheat crops thus remain vulnerable to extreme cold.?
• Forecasters expect little snow to accumulate this week.?
• So, the exposure remains – but is unlikely to become an active risk.
• Forecasters also expect temperatures in those regions to remain above dangerous levels.?

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United States winter crops snow cover is more mixed.?

• The US northwest now has protective snow cover.?
• Hard Red Wheat in the west of the Central and Southern Plains remains mostly without snow cover.?
• Forecasters though do not expect any worrisome cold in those areas.?
• Winterkill thus remains a dormant risk for US winter crops.?