Global weather patterns can move together, as we have seen when drought has impacted the northern hemisphere as well as Australia, resulting in sharp declines in world production.
This year, it’s not drought but excessive rain that is impacting crops – firstly in France, and then across other parts of Europe, the Black Sea region, Canada and the US. At the same time, eastern and now southern Australia are being hit by excessive rainfall in the key part of our growing season.
In many places, the increased rainfall has delivered much bigger crops.
But it’s also reduced the quality of available crops, either through lower protein levels, or actual harvest damage from fungal diseases or sprouting.
At the moment, in the US and up into Canada, the rain is slowing the pace of harvest, and in some cases taking yield away.
Higher corn and soybean prices are flowing over to US wheat futures. Although their wheat crop is safely in the bin, and no sustained price rally is expected, the flow on effects from the row crop markets is putting a new floor in wheat futures.
In terms of the wheat harvest, Canada and Australia are the two major regions and exporters where the crop is still to be harvested.
The Canadian harvest is under way, but is being slowed by wet conditions.
The Australian harvest is basically still ahead of us, with very wet conditions in Queensland where harvest gets under way at this time of the year.
There are large areas of crop in NSW and Victoria which has gone under water at some stage in the last week or so, and there will be yield losses. Cereal crops might not be affected as much as canola and pulses, but some acres will be lost completely. Other paddocks will see yield potential trimmed.
The flipside is that where rains have been above average, but not totally excessive, yield potential is growing q quite strongly.
That should ensure Australia has a big wheat crop even if we fall short of a new record.
However, protein levels are likely to be lower, and some farmers will face the heartache of below average production coinciding with low grain prices.
We will have some real problems here in Australia if our wet season extends into the harvest period and reduces milling quality wheat to feed grade.
This will force premiums for high protein milling wheats up, and push more of the crop into the very low priced feed grain market.
Growers affected by low production, quality and feed grain prices will need to plan their approach to marketing carefully, with a mix of harvest sales and on farm storage for later sale.