Ag Markets Testing Recent Highs Due to Weather Risks

Dry Weather Causes Concern

• The two week forecasts call for continued warm and dry weather across Brazil’s safrinha corn areas.

• Over the weekend, rainfall of .2-1.50" covered 35% of the area. The coverage of rain over 1.00" is estimated at 13% of the area.

• the Northern US Plains and the Southern Canadian Prairies also hold in a drier than normal outlook.

• The eastern Dakotas and northeastern Nebraska to Wisconsin will be driest overall during the next 10 days.

• The Canadian Prairies are expected to see some limited precipitation, particularly in the northeast and far southwest, but more rainfall is needed.

• Europe’s soil moisture is mostly adequate, but a gradual dry down in the north is expected for the next few weeks.

• Cooler than normal temperatures are keeping spring crop development and planting advancing slower than usual.

• The dry areas of Europe are forecast to receive only spotty showers into early May.

FBN’s Take On What It Means: The largest area of concern is for Brazil’s second crop corn. The risk that the area will see lower yields increases significantly into next month, as there is limited rain in the forecast and the dry season starts in early May. Weather concerns on top of tighter than normal world stocks likely continue to keep prices supported.

APK-Inform Updates Ukraine’s 2021 Outlook

• The agency expects Ukraine’s total grain harvest to rise by 13% to 73.6 million tonnes, citing weather that is more favorable than last year.

• APK-Inform sees wheat harvest at 27.6 million tonnes, which would be up about two million tonnes from last year’s crop.

• Barley production is seen at 8 million tonnes, in line with the 2020 harvest.

• The corn crop is seen coming in at 35.7 million tonnes,which would be up notably from the 2020 harvest of 29.5 million tonnes.

• With higher output, exports would be up versus this marketing year.

• Wheat exports are forecast at 19.75 million tonnes, up about two million tonnes versus this year’s export expectations.

• Barley exports could come in at 4.3 million tonnes, which would be inline with this year’s expectations.

• Corn shipments are seen at 29.5 million tonnes, up significantly from this year’s expectations around 23 million.

FBN’s Take On What It Means: It still is too early to put a lot of confidence in production numbers for growers in the Northern Hemisphere, but a rebound for wheat and corn production in Ukraine is a reasonable expectation given that last year, conditions were dry which hampered yields. Higher wheat exports will simply add more tonnage to foreign competitors; higher corn exports will mostly be swallowed up by China and limit export opportunities there mainly for the US.

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