The News & What it Means – Never Too Early to Keep an Eye on the Weather

By John DePutter & Dave Milne – January 10, 2019

 

The news:

“The bulk of the main US corn, wheat and soybean production regions – including the Midwest and the High Plains – were almost entirely drought-free at the beginning of the year.”

– Syngenta website article, Jan. 7, 2019

 

What it means:

It’s relatively rare for the large American production regions to all be in such good shape at the same time. But it’s no guarantee about the upcoming growing season.

 

Consider that in 2012 – when summer drought shriveled the US corn and soybean crops – only about 13.5% of the Midwest started off the year in some form of drought. And in 2008, which stands out as one of the wettest production years or record, almost one quarter of the Midwest was considered abnormally dry as of early January.

 

In short, the old adage that past performance is not indicative of future results certainly rings true here.

 

As all farmers know, the weather is incredibly fickle and it would be no surprise if the relatively benign US conditions today morph into something much more worrisome by the time producers actually head to the fields to plant the 2019 crop. Of course, once the crop is the ground, the weather will take on even more importance.

 

Three-month forecast dry in Indiana, wet in south

So, although it’s still very early, how is the extended outlook for January, February and March shaping up?

 

The current outlook points to a potential dry spot in the east-central Corn Belt. This pocket reaches up into southern Michigan near the Ontario border.

 

If this spot expands, it could raise some eyebrows. Right now, though, it’s neither big enough nor time-sensitive enough to matter. Just an interesting note.

 

As the three-month forecast map below also shows, there’s a bias toward wetter than normal weather across the southern and extreme eastern US

 

 

The wetter bias across the south may help to quiet any possible worries about the typically dry Hard Red Winter wheat states of Texas, Oklahoma and Kansas. (However, it is worth noting much of this year’s HRW crop was planted under less than ideal conditions, with farmers battling what was already too-wet weather). Any precipitation that falls as snow would obviously also help to protect the winter wheat crop from any extreme cold that develops through the winter months as well.

 

To that end, the three-month temperature outlook appears warmer than normal for the western half and more northern parts of the country – including North Dakota – with no clear indication for either the heart of the Corn Belt or the southern Plains winter wheat areas.

 

US weather WILL affect your prices

The weather is always THE BIG fundamental factor in market direction in spring and summer.

 

Right now, no oddities are out there. Nothing to say drought or some other weather vagary will drive corn, soybeans are wheat sharply higher.

 

Same time, it’s far too early to speculate on the outcome.

 

It’s not too early to keep an eye on any developing patterns and stories, even in the depths of winter. We’re doing that.

 

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