The grain market has been battling the best U.S. corn and soybean crop conditions in more than 20 years, plus trade war worries with China.
However, the one grain that continues to witness global weather problems is wheat. After a drought in the Plains, which sharply lowered wheat production this spring, both the French and Russian wheat crops are coming down, due to previous dry weather. In addition, rains in Australia have not been enough to alleviate a 5 month old drought. With El Nino possibly forming later this year, this opens the door for further worries for some wheat crops.
Our medium term weather forecast product CLIMATECH, along with our own separate research, continues to suggest that Russian and/or European wheat crop prospects will fall in the coming weeks. However, painting a bullish scenario is “questionable” given that huge global stocks remain in wheat, trade tarrifs and what has been, mostly, excellent early summer crop prospects for corn and soybeans.
So why then, do wheat prices continue to tumble, every-time there is a short term bullish weather concern? It all has to do with huge global stocks continuing to haunt the market and worries over a Trade War, not just with China, but Canada and other countries.
Notice (above) how much worse crop conditions for wheat are vs a year ago. The orange shows regions of crop conditions worse than a year ago that will likely continue.