Lack of rainfall in the US and Canada is putting pressure on grain prices

A lack of rainfall in the US Corn Belt and the end of planting in Canada under favorable conditions are the main weather factors affecting the markets this week.

Uncertainty in rainfall forecasts for next week and warmer than normal temperatures in the central US Midwest remain the main pressure factors on soybean and corn prices this week. The amount of precipitation this week was minimal, and 1-3 mm of precipitation is forecast for the next week, which is not enough for the good development of corn and especially soybean crops.

Areas of showers and thunderstorms continue across parts of the Central and Southern Plains this weekend, before a second wave of precipitation moves into the region next week.

The completion of planting of short-term crops in Canada and the forecast of favorable rainfall improve the outlook for the canola and wheat crops in Canada.

Heavy rainfall is expected this weekend and next week in Saskatchewan and Alberta, which will improve crop conditions, including in dry areas.

Rain continues to move slowly into southern Brazil this week, improving the condition of maize and winter wheat crops, but in Mato Grosso the heat continues and no rain is yet forecast, which will negatively affect the maize crop.

Rainfall in Argentina slightly improved the condition of the wheat crop, but cold weather with frost has set in, which will slow the germination and development of the wheat crop. Argentina's soybean harvest is nearing completion, and analysts at the Rosario Grain Exchange cut their 2022/23 FY Argentina soybean production forecast by another 1 million tons to 20.5 million tons, versus the USDA's forecast of 25 million tons.

Most EU countries expect rain next week to improve crop conditions, although local analysts have already cut wheat and corn crop forecasts amid dry May and June in Spain, France and Germany.

Favorable showers continue in the Black Sea region, which will continue into next week, and the central part of Ukraine remains drier, which reduces the potential for corn and soybean harvests. According to the estimates of the Ukrhydrometeorological center, favorable conditions for the formation of a high winter grain harvest are maintained in Ukraine, but dry conditions were observed in many areas of Odesa, Mykolaiv, and certain areas of Khmelnytskyi, Cherkasy, and Kyiv regions.

In the western and northern regions, in particular, Khmelnytskyi, Ternopil, Volyn, Rivne, Zhytomyr, Kyiv, Chernihiv, where only 5 to 30% of normal precipitation fell during the period from May 1 to June 10, and forecasts for the next week also do not promise precipitation.