Wheat supply for 2019/20 is currently being adversely impacted by a range of different weather concerns around the globe. The cocktail of weather lending support to the market includes dryness, hail, extreme cold, frost and heavy snowfall.
Due to this, Rabobank has lifted its CBOT wheat expectations and we now see it trading between USc 500-515/bushel throughout 2020. This will be a welcome, albeit small, lift for Australian grain farmers who have otherwise been relying on tight local conditions to lift domestic prices.
In the US and Canada, the weather concern is low temperatures and snowfall.
The USDA revised Canadian wheat production down one per cent to 33 million tonnes this month, and we may see a further decrease if the unfavourable weather continues.
Meanwhile, in the northern US, their spring wheat harvest is only 94 per cent complete when it would normally be completed by the second week of October.
In Argentina, it is ongoing dryness - as well as hail and frost received over the past month - that has delivered supply downgrades.
Expectations for Argentina's wheat harvest have already been reduced by the USDA, but down to what would still be a record 20.5 million tonnes - as an increased area planted to wheat is keeping new crop supply prospects above last year's harvest volume, as yields fall below last year's.
Dryness has also been affecting the wheat outlook in southern Europe and the Black Sea region. Planting has been delayed due to below-average rainfall.
However, with the arrival of rains over the last fortnight and with a favourable rainfall forecast for most of Europe this month, the season is likely to pick up. And of course it is dryness, and frost in parts, that is Australia's contribution to this weather cocktail.
As the headers get rolling in earnest in Western Australia and South Australia, Queensland finishes up and NSW considers reaping the little that it has, it is only in Victoria that we expect close to an average harvest volume. We forecast that Australia's winter crop harvest will be just 27.7 million tonnes this year. That is down nine per cent on last year's disappointment, and this keeps it 31 per cent below the five-year average.
But despite the cocktail of weather concerns around the globe, global production is still expected to be up three per cent, with stocks forecast to grow by four per cent over the year. The cocktail of weather required needs to be much more potent before we get a serious rather than just a little lift in global wheat prices.