July 3, 2015
Wheat prices to spike as droughts persist in Canada and EU
Prices for wheat, rapeseed and other crops are expected to spike, in light of serious drought conditions in Canada and Australia as well as the EU, especially France, the largest wheat producing region in the bloc, the Star Phoenix reported.
According to Patricia Mohr, a commodities market analyst with Scotiabank, significant dry conditions had hit Western Canada and may reach the northeastern corner of Australia, the world''s fourth biggest wheat exporter.
As a result, prices for wheat and rapeseed rose in May, with rapesed prices up over US$400 per tonne and wheat recovering to US$288 per tonne. "Wheat prices are still way below year-earlier levels, while rapeseed is still down by low year-ago levels," Mohr explained.
"The grain market is starting to recognise the potential (impact) for El Niño on the crop results," the analyst said, adding that the Canadian provinces of Alberta and Saskatchewan are facing the worst drought in close to three decades. Topsoil moisture in these areas is at its weakest since 1988.
"Unless good rain is received by July 10, a serious drought will ensue, reducing the crop outlook," Mohr warned.
With recent conditions affecting the provinces'' pasture lands and the cow-calf sector, cattle producers may eventually rush the sales of grass-fed cattle and calves at an unfavourable timing if the situation escalates. This will mar efforts to boost cattle numbers which are at the lowest since the 1970s.