Grains Weather Outlook

Includes: DBC, GSG
by: Michael Ferrari

A persistent dry pattern is now becoming more of a concern to Argentina’s wheat crop.  As wheat planting is underway, more rain is needed to spur a healthy germination period, and this pattern looks to remain in place for the next two weeks.  No significant precipitation is expected in the region until the week of 22 June.  The table below is a daily precipitation summary over the last 35 days for select regions in Argentina’s grains production region (colors correspond to changes vs. same period last year).  In addition to weather impacts, farm worker strike continues to present challenges for the physical market. (Click chart to enlarge.)

May’s healthy precipitation pattern in Brazil’s Centre-South is extending into June.  Rainfall and soil moisture are wheat planting, and the crop is getting off to a very good start.  Corn (1st crop) and soybean harvest ending without any significant disruptions.

In the US, more heavy rain moved into the corn and soy belts as a front packed with moisture headed into the central and southern plains on Monday.  While the temperatures finally warmed so that soils should have received enough heat to finally dry the extremely wet soils, over 6 inches of rain fell across much of the eastern belt last week (map below shows last week’s summary), so weather continues to be an issue for the corn and bean crops.  The potential yield limiting crop issues discussed in last week’s report will not be helped by the rainfall early this week, and while conditions should improve next week, we feel that it will be extremely difficult to recover from the poor start.  Even if weather was perfect from this point forward, the best case would not even achieve trend yields in corn and soy, and the downside risk to both crops needs to be noted.  WTI crop models are now placing corn yields at 3-7% below trend, and soybean yields at 3-6% below trend (18 major states).  Monday’s talk of acres shifting to beans is wishful thinking.  In order for soybeans to have a good yield, conditions need to be near perfect through harvest.