The News & What it Means – Potential for Dry Spring Stirs Farmer, Market Anxiety

By John DePutter & Dave Milne – March 5, 2019
The news:

“Most Canadian Prairie farmers can expect a dry start to spring. ‘Run-off potential is certainly below average for a big part of the Prairies,’ says World Weather Inc. meteorologist Drew Lerner.”

– FCC website article, Feb. 28, 2019

What it means:

Plenty of anxiety for some farmers and markets alike.

Granted, a dry start to the spring will allow farmers to get out on their fields and get their 2019 crops in the ground in good time.

But we’re betting plenty of farmers in Western Canada would happily accept a few seeding delays if it meant there was more moisture in the ground. As can be seen on the map below, much of the main Prairie production area has already experienced below normal precipitation over the last two years (the area denoted by yellow). That means some areas – most notably central and southwestern Saskatchewan, and southern and some central Alberta locations – are staring down their third straight year of overly dry conditions.

The past two growing seasons, the relatively good areas have helped to offset the production losses in the poorest areas – helping to keep the biggest crops like canola and wheat well supplied. Similarly, there has also so far been no major production shortfalls for most other Prairie crops.

A third straight year of dry weather?

But if there’s more widespread dry weather in 2019, that could all change. At an estimated 900,000 tonnes, 2018-19 barley ending stocks are already record low and poor yields could blunt the impact of an expected increase in planted area. Ending stocks are also particularly tight for flax, a crop is that is grown in a relatively small geographical area, thus making it particularly vulnerable to any potential weather problem.

Traditionally small-acreage special crops like canaryseed might also be ripe for a significant weather-inspired rally.

El Nino expected for spring

According to the latest Canadian Agriculture Weather Prognosticator from World Weather Inc., the outlook for the Prairies hinges heavily on whether an El Nino remains in place through the spring. If so, it could lead to continued dry weather for those Prairies areas that are already dry, while funneling more moisture into those areas – such as the north-central and northwestern Prairies – that are too wet and would welcome drier conditions.

Note: The National Oceanic and Atmospheric Administration (NOAA) announced the arrival of El Nino, around the middle of last month and forecast that it will remain in place throughout the spring.

It also worth mentioning that in a spring forecast released last week, AccuWeather said it is anticipating worsening drought for southern Saskatchewan and expanding into southern Alberta as the spring progresses.

Weather always a market factor

The jury remains out on what the summer will bring in terms of precipitation, but spring weather is set to become a factor in the markets – and sleepless farmer nights.

To help you navigate the ups and downs of any potential weather markets this year, try out our weekly Market Advisory Service newsletter.

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