The world wheat market, having ridden out jitters over dryness in Europe and Australia, faced fresh concerns with a lack of rain raising questions over Russian sowings, while excessive wetness dogs South American prospects.
Russian farmers – whose grains production this year has far exceeded levels feared late last year, when a lack of rain dogged early development of winter crops – face another dry sowings period in many areas.
“It’s very dry in an area stretching from the Ukraine to central Russia,” said traders at a major European commodities house, which has substantial interests in the former Soviet Union.
“There are fears that this may delay planting in what is a fairly restricted window before the winter sets in.”
‘More precipitation needed’
The comments follow a caution from the International Grains Council last week that dry weather had already raised doubts over the extent of Ukrainian rapeseed sowings completed within the “very short” ideal sowings window of August 10-25.
“Plantings are officially forecast at 823,000 hectares, unchanged year on year,” although below the five-year average 1.0m hectares, the council said.
“However, owing to dryness, fieldwork was estimated to be just 15% complete by August 21 – well behind normal.
“More precipitation is needed in order to secure timely sowings and prevent a likely steep drop in output.”
‘Low soil moisture reserves’
At SovEcon, the respected Moscow-based analysis group, managing director Andrey Sizov said that the weather “has been quite dry in previous weeks” in some areas.
“My guess is that soil moisture reserves are lower than average” in southern Russia, a key region for producing wheat for export, and so particularly closely watched by investors.
However, Mr Sizov – noting that Russian winter grain sowings were, at 3.2m hectares completed, running ahead year on year – said that moisture levels had been better in areas such as the Volga region where crop “has to be planted right now”.
Farms in the South still had some time yet before the plantings window closed, and looked like receiving some rains.
“In the next two weeks, the forecast is for the European part of Russia, including the South, to receive some rain, of perhaps 10mm-25mm,” Mr Sizov told Agrimoney.com.
US-based weather service MDA said that “a few showers are possible” this week in areas including north western Ukraine and, in Russia, Central region and the Volga Valley.
“The rains would improve moisture for new winter wheat seeding, although more rains will still be needed in many areas,” MDA said.
Separately, Michael Cordonnier, the influential crop analyst, flagged growing concerns in Brazil, a perennial wheat importer, that it will need to turn beyond its typical South American origins for grain to fulfil its requirements.
“Brazilian millers are concerned that there will not be enough wheat produced in Mercosul countries to meet Brazil’s needed wheat imports,” Dr Cordonnier said.
“Unfortunately, the 2015-16 wheat crop in South America has already encountered problems of lower acreage and adverse weather.
“The ongoing concern is that the situation could be further aggravated by the possibility of heavy rains during harvest triggered by El Nino,” which has a history of bringing excessive moisture to parts of Argentina and Brazil.
In Brazil itself, results from the first 5% of the harvest “indicate variable yields as well as quality”, a reflection of heavy rains in July, although there are some expectations of an improvement in the crop as harvest proceeds, Dr Cordonnier said.
Meanwhile, in neighbouring Argentina, South America’s top wheat exporter, record-heavy rains last month have caused the loss of an estimated 500,000 hectares of the crop, he added.
The Buenos Aires grains exchange last week estimated losses at a smaller level, at some 2% of sowings, equivalent to about 75,000 hectares.
A need by Brazil to source wheat imports from outside Mercosul would likely see it turn to North America for alternative supplies, although Germany is occasionally talked of in the market as a potential origin too.
(Source – http://www.agrimoney.com/news/wheat-market-finds-fresh-weather-worries-in-russia-s-america–8721.html)