US, RUSSIA MAY HOLD KEY FOR BULLISH MARKET
A ridge of high pressure evolved recently over the heart of Russia’s grain production region grabbing some attention in the commodity trade. Sometimes a similar ridge of high pressure evolves over the central United States impacting the Great Plains, western Corn and Soybean Belt and the southeastern Canada Prairies with drier and warmer-than-usual weather. Producers and traders who are looking for a market rally are watching these two regions closely. Russia’s Southern region, eastern Ukraine and Kazakhstan have just completed more than six weeks of below-normal precipitation and the second half of that period was also warmer than usual.
A breakdown in that ridge of high pressure was expected for a little while in late April and early May. That may allow some rain to fall, but the dominating influence on weather patterns in Russia should return the high-pressure ridge later in May and June when temperatures will be much warmer, and the ground will dry quicker. The return of dry and warm weather later this spring and early summer is anticipated, and its impact will be closely monitored. Recent years of similarity produced a variety of impacts on production with 2010 being the most extreme and 2016 having the least impact. Canada’s Prairies have been dealing with drought for a few years with some areas in the southwestern parts of the region reporting drier-than-usual conditions for more than seven years.
Drought is being whittled down in Iowa and neighboring states, and this was expected to continue through the first part of May. The same weather pattern that changes Canada’s weather this summer also will change the US weather, and that will include a ridge of high pressure over the Great Plains and western Corn Belt. The high-pressure ridge is not expected to be of great magnitude for a long period of time, but perhaps long enough to deplete soil moisture and induce a few bouts of hot weather. Therefore, despite today’s market doldrums, there is potential that US and Russia weather will be threatening enough to at least induce a short-term market rally. The rest of the potential will lie in agricultural commodity demand.
(Link: WorldGrains)
