Global Weather Problems Support Wheat


by Bryce Anderson, DTN Ag Meteorologist and DTN Analyst

OMAHA (DTN) — In a somewhat rare occurrence, the harsh summer conditions that defined the drought of 2012 in the central U.S. to some extent bypassed the wheat crop.

By the time sustained very hot and dry conditions were established, ahead-of-average development in the hard red winter and soft red winter wheat in the Plains and Midwest meant that the majority of this year’s U.S. winter wheat crop had matured enough to avoid the full brunt of historic-level heat.

Farther north, wheat in the Northern Plains and Canadian Prairies has had near-ideal temperatures and rainfall, placed mostly out of the drought center.


Such a scenario sounds like the setup for a bearish wheat market weather factor going into the rest of this summer. However, the past few weeks have seen wheat prices rally; they have been pulled along by soaring corn prices, but also by enough international issues that call into question just how substantial world wheat supplies will be for the rest of this year.

“Crop losses in the Black Sea Region specifically have turned a strong carry in futures spreads to an inverted situation in deferred issues,” said DTN Analyst John Sanow. “This should continue to support wheat long term and hints that U.S. wheat will garner a larger foothold on its share of exports.”

The Black Sea region — specifically southern Ukraine and western through southern Russia — along with the former Soviet New Lands areas of the Volga, Urals, and Siberia districts along with Kazakhstan had several drought periods which have hurt wheat production. Dry conditions during winter caused crop losses when springtime arrived in winter wheat fields. Then, spring wheat areas have been badly damaged by hot and dry conditions during summer. It’s this pullback in competitors’ wheat supplies that has given an additional boost to U.S. wheat prices in the past few weeks.

Weather forecasts for the next few months offer a continued solid undertone to the wheat market from a weather standpoint. The U.S. Climate Prediction Center (CPC), a division of the National Oceanic and Atmospheric Administration (NOAA), calls for drought conditions to remain in effect over the Central and Southern Plains through the Midwest during August, September and October. That prospect concerns Telvent DTN Senior Ag Meteorologist Mike Palmerino.

“This pattern continues with extreme heat and dryness,” Palmerino said. “Concern will begin to increase during the latter half of August if the rainfall pattern does not improve with regards to planting winter wheat this upcoming fall season.”


One feature which could help with rainfall in the Southern Plains is a full-fledged El Nino event in the Pacific Ocean. El Nino does show the trend toward forming, after two years of La Nina. El Nino is a more promising rainfall factor for the Southern Plains.

“El Nino will occur. The question is how big a player it will be,” said Nebraska state climatologist Al Dutcher. “If we were to see a rapid materializing of El Nino, it would contribute to an increase in precipitation (in the Southern Plains). But it doesn’t look like it’s going to start as early as we had been hoping.”

Fall precipitation with El Nino has a high probability of being above normal in the extreme eastern Pacific, as well as the Texas coast east to Florida. Dutcher said an increase in the El Nino region into the central equatorial Pacific would bring a higher precipitation chance into the picture for much of the remainder of the Southern Plains. But, as of early August, such a trend appears to be unlikely.

There is also the question of what will be the outcome for wheat should corn and soybean prices pull back from the levels they posted in late July. At that point, wheat price trends are quite likely to move lower.

“All bets are off if soybeans and corn have reached a top following the recent move to historic highs,” Sanow said.


© Copyright 2012 DTN/The Progressive Farmer, A Telvent Brand. All rights reserved.

Posted with DTN Permission by Haylie Shipp


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