Canada, Russia wheat production threatened by dryness

The region had one its best starts to the growing season in years, and having dryness kick in while wheat and barley are reproducing sends some chills up the spine of many producers. The marketplace does not seem overly concerned about the situation even though some of the spring wheat in Russia also is stressed by heat and dryness.

Most of the world’s wheat production areas in 2024 experienced favorable weather this year. The one key exception was Russia and immediate neighboring areas of both western Kazakhstan and eastern Ukraine, where dryness was a constant battle. Production of winter wheat was greatly reduced in these areas because of drought and late season frost and freezes. Since then, Russia dryness has not gone away but it has helped to mature winter crops and support their harvest.

Recently, there has been some northward expansion of dryness across southern Russia and eastern Ukraine into spring wheat areas of Russia raising more market concern about overall production from that nation. Recent weather brought daily high temperatures into the 90s and near 100°F while rainfall was minimal. These conditions have not only stressed corn, soybeans and sunseed, but it has begun to impact spring wheat and barley produced from southeastern portions of Russia’s Central Region to the Middle Volga River Basin and southern Ural Mountains region.

A problem with Russia spring wheat production in 2024 would not likely go over very well this year after reduced winter cereal production. It is not unusual for years in which El Niño events translate to neutral ENSO conditions and then eventually to La Niña that Russian grain and oilseed production is challenged and usually comes up short relative to other years of production. The winter wheat crop already was reduced and enough dryness and heat from eastern Ukraine to western Kazakhstan has prevailed in recent weeks to threaten some of the region’s summer crops like sunseed, corn and soybeans.

The recent development of high pressure over western Russia and Ukraine stimulated the heat and dryness noted above and it has allowed dryness in summer crop areas to expand northward into spring cereal production areas. Any persistence of this pattern could have a bigger impact on Russia 2024 grain and oilseed production. An advertised break from the hottest and driest weather is just beginning. A general soaking of rain is unlikely, but cooling is expected and that should help conserve what is left of the moisture profiled in spring and summer crop areas.

The next few weeks will prove to be most interesting for Russia and Ukraine production potential for many crops. What makes this tendency even more important to world trade is the fact that Canada’s Prairies is suddenly trending into a drier and warmer weather bias as well. Crop conditions that were rated quite favorably in late June and early July are suddenly drying out just as reproduction gets underway.

The biggest threat to Canada production this summer may be to canola and spring cereals. The next few weeks will prove to be critically important for both Russia and Canada. Any persistence of hot, dry, weather is likely to hurt production and could help lead to a rebounding futures market after an amazing sell off in recent weeks. World Weather, Inc. believes that dryness and heat in both countries will not reach extremes during the balance of the growing season and “some” timely rain will fall to limit the fall in production; however, production is not likely to swing back to the ideal level that was once expected.

Warmer-than-usual temperatures are predicted for crops in Canada and Russia as well as Ukraine and Kazakhstan. No prolonged temperature extremes are expected, though, and that should help crops get to the finish line of reproduction without significant losses. Some reduced yield is inevitable for crops in both regions of the world, but the damage done to production should be small enough to keep world supply of small grains sufficient to prevent a perceived or real shortage of small grains.

The reduced production from Canada and Russia should be closely monitored; however, the odds are very good that Australia and Argentina will have very good crops in 2024. Australia’s wheat and barley development is off to a good start and sufficient rain in the next few weeks will occur to raise soil moisture for a quick and aggressive start to the growing season, which resumes in late August and September after a period of crop semi-dormancy.

Argentina’s wheat planting is nearly complete. The nation has trended a little dry in recent weeks, but it also has been cooler than usual during much of the autumn and winter and that has limited plant moisture demand and conserved soil moisture. Rain should occur in timely intervals during the balance of winter season, suggesting a well-established wheat and barley crop is likely. The delayed arrival of La Niña and possible weak to non-traditional La Niña influence on the world in the third and fourth quarters of 2024 suggests there is potential for timely rainfall that will support a much larger-than-usual winter cereal crop.

If Australia and Argentina production is as good as expected, the impact of lost production from Canada and Russia might be at least partially countered limiting the upside potential in futures prices unless another large production area of the world comes up with a production issue.