Unpredictable weather is ruling agriculture markets, as supplies of major commodities are stretched thin allowing little room for output losses, while meteorological conditions in major producing countries look uncooperative.
While ongoing weather troubles in the agriculturally prominent countries are influencing prices of wheat, corn, soybean, and vegetable oils, uncertain weather is likely to cast a shadow on production and price outlook going forward. The US, Canada, and parts of South America and the EU are facing historically dry weather conditions while other parts of the EU reel under devastating floods.
Additionally, chances of La-Nina in the latter part of the year was also adding to the mounting concerns around global weather. The latest forecast by the US Climate Prediction Center said La Nina will potentially emerge during September-November and last through the 2021-22 winter, with a 66% chance during November-January.
The La Nina phenomenon, which is an occasional but natural cooling of the equatorial Pacific, is typically associated with above-normal rainfall in Southeast Asia, South Africa, India, and Australia, and drier weather in Argentina, Europe, Brazil, and the southern US.
The US is witnessing historically dry conditions, with many western states reeling under severe to exceptional drought. These states are major producers of the country’s spring wheat crop and account for nearly 20% of the US’ total corn crop share.
In Canada — the largest grower of spring wheat and canola — extreme heat and drought conditions are having a devastating effect on canola and wheat crops grown in the Prairies region.
Brazil — the second-largest corn exporter in the world — suffered severe drought during most of the corn-growing months and in addition to that, the southern part of the country was affected by frost toward the end of June, which exacerbated corn yield losses.
Southern and northern regions of Russia are experiencing dryness and rising temperatures, according to local reports. Dryness is also a concern for Ukraine as the temperature in central Ukraine has been well above the seasonal norm for a month now, according to reports. Meanwhile, heavy rainfall lately in eastern France and western Germany resulted in severe flooding. The extremely wet weather in these areas stalled wheat harvesting and has likely led to quality declines, according to the weather agency, Maxar.