A heatwave across the United States and Canada is having a devastating effect on crops and pushing grain stocks low.

Key points:

  • A heatwave in the US and Canada is affecting crops leaving stocks at “dramatically low” levels
  • The canola futures hit “unbelievable” $1,000/tonne
  • This is a promising situation for Australian growers on track for another big crop

It is good news for Australian farmers, though, as the price of canola is rocketing.

In the United States, temperatures in some regions have risen to 50 degrees Celsius, smashing previous records, while Canada is in the grip of its worst drought in two decades.

Temperatures have risen to record levels in the Pacific North West and parts of California.

According to the US federal government drought indicator, the country hasn’t seen such dry conditions in the West or Washington State since the late 1800s.

Loading

Farmers prepare for losses

Fourth-generation farmer Nicole Berg said she would only harvest half her crop.

Berg’s family farm is based near the epicentre of the heatwave at Patterson, Washington.

She expects her income to fall dramatically. 

Loading

Canadian drought

Trevor Sherman, who farms near Battleford in the Canadian state of Saskatchewan, said he had been lucky to jag some rain, but that wasn’t the case for others.

A farming couple from Canada standing on their property

Canadian farmers Trevor and Michelle Sherman say wheat crops in Canada will not yield much this year due to low rainfall, two years of drought and a heatwave.(

Supplied:

)

“My crops are holding on, but the forecast is for seven days of 33 to 34-degree heat,” he said.

Mr Sherman has travelled widely across southern Saskatchewan and Alberta this week, an area spanning millions of acres, and he said there were few bright spots.

“In all of that area, people have given up on it.

“If they’ve got cows, they’ve put them out [to feed on the crop], or they’re trying to cut what they do have for feed for the winter,” he said.

He thinks it is as bad as the drought in Canada in 2002-2003.

“There will be durum crops that run 10 [bushels to the acre], canola crops that run five to 20, wheat crops that run five to 10.”

In metric terms, 10 bushels of wheat to the acre is around 0.67 tonnes to the hectare,  about 20 per cent of the average yield for a Canadian wheat crop.

“They just can’t come back now. We needed water two weeks ago.

‘Unbelievable’ canola price

The forecast for corn, soybean and spring wheat crops in the US is being downgraded, leaving stocks “dramatically low”, according to the latest World Agricultural Supply and Demand Estimates report.

Wheat prices were at $770/tonne in May, then fell and have since climbed again to $684/tonne as the crop estimates come in lower than expected. 

Dennis Voznesenski, a grains and oilseeds analyst with Rabobank, said the improvement in canola prices had been substantial in the last week, and that was flowing through to Australia.

Non-GM canola in Western Australia is trading at $755/tonne and GM canola at $720/tonne, while the Canadian futures market is running hot, as high as $1,000/tonne. 

Canadian canola prices are double the 10-year average.

A graph showing the Australian canola price over the last three years.

Australian canola prices are tracking well over $100 higher this year, due to the production problem in Canada and the US.(

Supplied: ABARES

)

Commodity analyst Tobin Gorey from the Commonwealth Bank is warning that grain prices can be volatile, but he said futures for spring wheat and canola had kicked up on the exchanges in Minneapolis and Winnipeg.

“Only 20 per cent of the US wheat crop is rated good, and we still have a way to go before it is in the bin.

“The world supply situation is so tight that it only takes a small downgrade in crops somewhere for prices to really lift.

The hot weather is expected to continue in the US all the way into August, so the prices will probably stay high.

“Considering the good growing conditions in the crop in Australia, that is good news for our growers,” he said.

Crops in the US and Canada are failing, pushing global grain prices higher
Source:
Source 1

LEAVE A REPLY

Please enter your comment!
Please enter your name here