The El Nino phase describes warming, while the La Nina cooling in a similar area. In between the two phases there is a neutral phase. It can last only a couple of months or it may take close to four years to enter the opposite phase.

“All indications are for neutral conditions to persist until spring 2014.” said David Phillips, senior climatologist with Environment Canada. The challenge about neutral conditions is that long-term weather forecasts, which are already challenging to predict with accuracy, become even more difficult.

“Of the 20 winters with neutral conditions since 1950, six were warmer than normal, six were colder and eight were average. There are no revealing patterns from a neutral phase,” Phillips said.

His observations are supported by others. On Aug 27, the Climate Prediction Center of the U.S. National Oceanic Atmospheric Administration, alongside the Australian Bureau of Meteorology, released their forecast for El Nino/La Nina cycles. All but one of the international climate models suggest neutral conditions. The one model shows only a small chance of a brief period of La Nina in the spring before returning to neutral conditions. There are no models showing a strong phase beginning in the short-term future.

There has been some speculation by a few U.S. agricultural analysts that La Nina would provide additional support for North American oilseed values. Over the past week, Chicago soybean futures markets have seen substantial volatility. On Aug. 27 the November 2013 soy future closed above $14, when it had been below $12 at the start of the month. Persistent dryness in the western Corn Belt, especially in the No. 1 soy-producing state of Iowa and No. 3 producing Minnesota, raised concerns.

The yield potential for soybean is still vulnerable and anxieties are growing that the abundant production forecasts may not be achieved. The recent rise in soybean futures values buoyed the entire oilseed complex.

The impact of Brazilian, Argentinian and Paraguayan soybean production on North American markets cannot be understated. Together the three countries account for more than half of the world soybean production, the majority of which is exported. On Aug. 26 Brazilian consulting firm Agroconsult forecast soybean area will grow to a record 29.3 million hectares, compared to 27.7 million in the previous year.

The U.S. Department of Agriculture is also forecasting a record area, albeit slightly smaller at 28.3 million hectares. USDA currently predicts record area in Argentina and near-record in Paraguay. The current environment sends all the signals to South American producers, who are on the cusp of their planting season, to favour soybeans over corn.

Even if soy production problems surface in the U.S., provided the South American harvest is as large as currently predicted canola and soybean value will be challenged to maintain high prices.

If midwinter weather scares build in the south, additional price rallies may be in store. La Nina typically brings hot and dry condition to the South American growing area with predictable yield declines. The 2008-09 and 2011-12 growing seasons were most recent strong La Nina events, where soybean production dropped significantly.

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Prairie farmers have been blessed with hot and dry conditions over the past week, in which the bulk of the region saw daytime highs in the low to mid-30s C. Even further north, temperatures were in the high twenties.

The past week was also noteworthy for its lack of rain. Data from WeatherFarm shows the majority of the Prairies saw no rain over the previous week. In those areas that did receive rain, it was generally light. The heaviest rain was in Manitoba’s southeast and Saskatchewan’s northwest, where 15-25 mm of rain fell.

The warm, dry temperatures have spurred crop development and maturation and across the Prairies, farmers are now either in the field with early harvest activities or readying for the anticipated harvest. Harvest is certainly later than in 2012, but is expected to run closer to normal with the current weather.

In Manitoba, harvest has progressed the furthest in eastern and central regions and has started in the province’s southwest.

Manitoba’s winter wheat and fall rye harvest ranges from mostly complete in the east to 10 per cent in the west. Spring wheat, oats, barley, peas and canola harvesting have started across the province with above-average yields and good quality reported.

Late last week, the Saskatchewan government reported four per cent of the crop was swathed or ready to straight-combine, compared to nine per cent harvested at this time normally. Harvest is also active in Alberta with winter cereals, peas being the most advanced, and good progress made on spring cereals and early canola.

Hot, dry conditions extended into the U.S. northern Plains and upper Midwest — and although the weather has eased concerns in Canada, it has had the exact opposite effect in the U.S. Temperatures climbed into the triple digits (F) in South Dakota.

Normally hot and dry weather at this time in that region of the U.S. would have little impact on the crops or markets. This year is different: because of the delays in seeding and maturation, many corn and soybean crops are still at a growth stage vulnerable to yield losses. As a result, futures markets for soybeans, corn and wheat all climbed higher late last week following declines over the previous seven days.

The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) has released crop progress up to Aug. 25, highlighting developmental delays in all crops across the U.S. Nearly all states were behind in corn development, but the state with the greatest difference from normal was the state with the most eyes on it. Iowa is now 31 percentage points behind normal for corn development. Not even half the crop has reached dough stage yet, compared to over three quarters normally.

In neighbouring Minnesota and Wisconsin, corn delays were slightly less, but still enough to raise concern with market participants. Delays in soybeans are not as pronounced as other crops, but soybean yield is more vulnerable to adverse weather at this point. Soybean prices have gained the most during the current weather scare.

Fortunately for Western Canada’s farmers, the above-normal temperatures are forecast to remain 2-4 C above normal. Environment Canada’s forecasts indicate the warmest temperatures happening in the eastern Prairies. Forecasts are for mostly dry weather until the middle of the week where rain is expected to return.

Western Canadian farmers may have a rare combination: cool and moist early-season weather that propelled yield forecasts higher and higher, dry and warm weather for harvest, and rising prices brought on by adverse weather in other parts of North America.

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Following a late start to spring and a cool summer, winter cereal maturity was delayed. Maturity delays do not put the crop at risk of frost as in most Canadian Prairie crops, but they do reduce the harvest window and create added pressure during harvest time.

“Many farmers use winter wheat as a fast-off-the-combine, early-delivered cashflow crop,” said Jake Davidson of Winter Cereals Canada at Minnedosa, Man.

This year, however, winter and spring cereals may be ripening within days of each other, rather than a few weeks apart.

The slow harvest pace is a stark contrast to last year. At the same time in 2012, winter wheat harvest completion was around 50 per cent in Saskatchewan and 90 per cent in Manitoba.

“Most farmers are estimating that all their crops, including winter cereals, are one to two weeks behind normal” said Daphne Cruise of Saskatchewan’s provincial Agriculture Knowledge Centre at Moose Jaw.

Early reports found crop yields ranging from 60 bushels per acre to the high 80s in central Manitoba. In eastern Manitoba, initial yields are mostly in the 80 bu./ac. range with average quality.

Over the past five years winter wheat yields in Manitoba averaged 62.5 bu./ac. and yields are expected to be above average this year.

Although the wet year increased disease pressure for some crops, Davidson said this has not been the case with winter wheat.

“We had lots of humidity this year, but with the cool temperatures I don’t think fusarium pressure was as high” said Davidson.

No quality concerns have been raised to date, but generally cool moist conditions lead to lower protein content, so some varieties may have difficulty reaching the minimum specifications for milling wheat.

One of the greatest impacts of the cool season may not be seen until 2014. Winter wheat is normally seeded after canola is harvested. With the majority of canola crops still flowering, it’s increasingly unlikely harvest will be completed in sufficient time to allow all of the intended acres to be sown.

— Stuart McMillan writes from Winnipeg on weather and agronomic issues affecting Prairie farmers.

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U.S. durum saw the greatest change on a percentage basis compared to USDA’s July report, as durum production estimates rose from 57.5 to 60.2 million bushels, an increase of five per cent.

U.S. production of desert durum was unchanged, as that crop is harvested and any changes will not typically occur until the release of USDA’s Small Grains Summary next month.

Although national durum production increased, it’s still 70 per cent of the five-year average for U.S. durum production.

The production increases were solely due to improved yield outlooks for the Northern Plains states of Montana and North Dakota. With a national yield average of 40.3 bushels per acre, the outlook is now closer to the five-year trend yield of 41.2 bu./ac.

Concerns had existed earlier in the growing season that the late pace of seeding would push the flowering and grain fill for durum into hot and dry weather, leading to yield reductions.

In contrast, the season has been generally cool and moist. Especially over the past 30 days, temperatures have been colder than normal, with the average departure one to three degrees below normal.

Although the cool temperatures generally slow development and growth, the Northern Plains durum crop is near, to slightly ahead of, normal for this time of year.

USDA estimated that as of Sunday (Aug. 11), 56 per cent of the North Dakota crop was ripening, equal to the normal progress for that time.

Short of unexpected weather events damaging the durum crop, price direction will be impacted by the neutral outlook for wheat and bearish corn outlook.

While a growing U.S. durum crop typically has a negative impact on prices, the already-large crops in Canada, the European Union and North Africa have been weighing more heavily on the market.

— Stuart McMillan writes from Winnipeg on weather and agronomic issues affecting Prairie farmers.

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In Alberta, the largest oat-producing province, the latest crop report from Alberta Agriculture and Rural Development said that as of July 30, 89 per cent of the crop was rated good to excellent condition, compared to the five-year average of 62 per cent. Crop development was rated highest in the northern region, where most of the province’s oats are grown.

In eastern and central Manitoba, meanwhile, “I would be awfully surprised if anything goes under 100 bushels per acre,” said Manitoba Oat Growers Association president Bob Anderson, who farms at Dugald, east of Winnipeg.

Generally, he said, hot temperatures at this time of year limit test weight, but this year with the cool temperatures, oats have been “busy making grain.

“I haven’t seen much evidence of diseases, even with this much moisture,” he added. “Oats crops are currently better than most… I have farmed since the 1960s and this is one of the best crops I have had.”

In Saskatchewan, 86 per cent of the crop was ranked good or excellent as of July 29.

Terry Tyson, purchasing manager for Grain Millers, an oat-milling company at Yorkton, Sask., said the recent cool weather is a double-edged sword. On one hand it allows plump, heavy kernels to form and increases yields.

The downside is that slow crop growth and development heighten the risk of fall frost and quality problems.

“A lot of growers in the area are starting to get pretty antsy and are worrying about the possibility of frost,” Tyson said.

The latest crop report from the Saskatchewan estimated that cereals in the key east-central region were two weeks behind normal development. If the cool temperatures further slow crop maturation, some growers will be sitting on edge until this year’s crop is in the bin.

Randy Strychar, an oat analyst with Ag Commodity Research, is less concerned.

“The oat crops across the Prairies look very good right now,” he said. He recently analyzed data back to the 1940s, which showed there was a one-in-20 chance of serious killing frost prior before Sept. 10.

“If we get this crop off we will have a tremendous crop as yields will be well above average,” Strychar said.

In recent years, oats have been one of the less profitable crops for western Canadian farmers, and acreage has been declining. This spring oats was the second-poorest returning crop in the black soil zone of Saskatchewan, according to the Saskatchewan Ministry of Agriculture’s annual cost of production analysis.

However, oats prices strengthened around the time of seeding this year, as ending stocks of oats were tight and buyers needed to replenish supplies. Contract prices offered at seeding time had increased substantially.

“In every crop except oats, what happens in Western Canada doesn’t really impact prices,” Anderson said.

Statistics Canada reported that acreage increased by more than 500,000 acres from 2012, which had one of the lowest oats areas on record.

— Stuart McMillan writes from Winnipeg on weather and agronomic issues affecting Prairie farmers.

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The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) on Monday reported that nationally, the country’s winter wheat harvest is 57 per cent complete, compared to the 2008-to-2012 average of 64 per cent. Crop growth and development have been slowed by earlier colder-than-normal temperatures.

Harvest delays range from five to 20 points behind normal in the west and 20 to 40 points in the east. Throughout the growing season, the hard red winter wheat (HRW) crop in the west has faced various challenges ranging from poor establishment, frosts and freezing rains, drought conditions and scorching heat.

Crop conditions for the eastern soft red winter (SRW) wheat crop have been much more favourable. There has been no significant drought or dryness, rainfall has been regular but not excessive, and temperatures have been near normal since March.

NASS’s weekly ranking of crop conditions reflected the earlier weather conditions. Western wheat crops were reported as 10 to 25 per cent good/excellent, and in the east good/excellent rankings were 65 to 75 per cent.

Although the damage in the west is undeniable, even there wheat yields have been highly variable. In the top U.S. wheat-producing state of Kansas, 2013 is described as either the worst in 40 years or one of the top three best years, all depending on location.

The Kansas Wheat Commission and Kansas Association of Wheat Growers harvest report for Monday mostly covered harvest results from the northwestern crop district which has suffered prolonged and extreme drought. Growers there described yields of six to 20 bushels per acre, even after 35 per cent of the acres worst hit by drought were abandoned. Average yield estimates for this year ranged from 15 to 25 bushels per acre. The five-year average yield was 46 bushels per acre in the northwestern district.

The July 3 report described average yields around 60 bushels per acre, with high yields in the 90s in the north-central district. In contrast to western Kansas, as the wheat crop entered the heading phase, the severity of the drought lessened allowing yield compensation.

Most of the HRW crop south of central Kansas is now harvested, and recent weather will allow more northerly farmers to continue harvesting under favourable conditions.

“Issues may arise”

Harvest weather conditions in the east haven’t been nearly so favourable. Following ideal growing conditions, as the wheat was ready for harvest, rains moved in. Over the past week eastern SRW states received 15 to 150 mm of rain. There were only brief breaks in the rain, which did not provide sufficient time for harvest.

“If there are significant delays harvesting due to rain in the coming weeks, issues with rot and sprouting may arise,” USDA said.

Much of the SRW crop is milled regionally and used in cookies and crackers. Over the past two years of tight corn supplies, significant amounts of SRW have entered regional feed markets.

Quality downgrades may ensure SRW continues to enter the feed market, rather than milling. Total SRW production is unlikely to be reduced by poor weather unless significant rains result in flooding and lodging. The current two-week forecasts are for above-normal precipitation in the east and near normal to below normal in the west.

— Stuart McMillan writes from Winnipeg on weather and agronomic issues affecting Prairie farmers.

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Initial estimates by Statistics Canada in its April seeding intentions repor saw farmers indicate they may seed 1.24 million acres. However, based on the June 25 Field Crop Reporting Series from Statistics Canada, 1.14 million acres were sown.

Earlier in the season there was some concern that an anticipated increase in acreage — combined with industry efforts to remove any remaining traces of Triffid genetics from the seed supply — would lead to shortages of seed. In the end there was strong demand for certified seed, but no shortfall in supply.

The June report also showed the majority of acres were sown in Saskatchewan. Until the late 1990s, the majority of acres were found in Manitoba, but according to the June report, Manitoba flax acres continued their free fall. StatsCan reported the area seeded in Manitoba to flax at 85,000 acres, the lowest since 1939.

Some in the industry are not so certain about the accuracy of that estimate. “Based on conversations we have been having with seed dealers they have seen more flax seed sales than the past few years.” said Anastasia Kubinec, oilseed specialist with Manitoba Agriculture, Food and Rural Initiatives at Carman, Man.

Additionally, she had not heard of significant returns of flax seed from farmers back to dealers. Her discussions with flax industry participants suggest between 120,000 and 150,000 acres will be seeded in Manitoba this year.

A few thoughts have been put forward to explain the shift in flax acres. William Hill, president of the Flax Council of Canada in Winnipeg, said producers in Manitoba have a lot of crop choices currently, with some of the flax acres lost to corn and soybeans. As one moves further west, the number of potential crops declines.

Hotter weather in recent years has also hit flax yields harder in the east, and left some growers uncertain about the performance of flax relative to other crops.

Plus, in past years, the majority of flax exports were going to Europe out of ports in the East. “Now the majority of offshore exports are going to China, via Vancouver,” Hill said. “This provides Saskatchewan and Alberta growers a freight advantage for the Chinese market compared to Manitoba.”

Year-to-date flax exports have been ahead of the previous year, with sales moving into China, U.S. and Europe. “The demand side is good for both industrial and food use” Hill explained.

Part of the increase in Chinese demand is driven by the same factors elsewhere. “There is a growing demand for heart healthy oils in China and other Asian countries.”

Hill felt another area of strong opportunity was in India, where there is demand for omega fatty acids, but with a significant vegetarian population, fish oils were not suitable.

Chinese demand was also being driven by the industrial sector, as the country has a huge existing infrastructure for transforming industrial oils.

Elevator prices for flax over the winter and spring have been strong. In response, farmers have been moving out old-crop inventory. Kubinec felt all of the signals were there for farmers to sow more flax this year.

“I am not willing to say Manitoba acres will never return. I don’t think we will see Manitoba to go back to the point where they have 40 to 50 per cent of acres,” Hill said, but added “it would not surprise me to see some growth in the next few years.”

The Flax Council, in partnership with the University of Saskatchewan and SeCan, continues its work to rid the Canadian flax system of Triffid. They plan to relaunch four CDC varieties in 2014 and testing to date has found 100 per cent of this new breeder-level seed free of Triffid contamination.

Triffid, genetically-modified (GM) flax variety bred in Saskatchewan in the 1990s, was deregistered in 2001 and was never commercialized, as the flax industry feared losing access to Europe if a GM flax were introduced.

But several countries closed their ports to Canadian flax in 2009 after a number of samples tested positive for markers of Triffid, which were soon found to have made their way into some breeder seed.

— Stuart McMillan writes from Winnipeg on weather and agronomic issues affecting Prairie farmers.

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In North Dakota, the largest durum-producing state, sown area dropped to 850,000 acres, similar to the record low in 2011 when saturated fields limited seeding to only 750,000 acres. Even accounting for that disastrous year, the previous five-year average had been almost 1.5 million acres in North Dakota.

Maps from the High Plains Regional Climate Center show from May 29 until June 27 the primary durum-growing area in the northwestern portion of state has received from 150 per cent to in excess of 200 per cent of normal precipitation. Temperatures have been slightly below normal over the same period.

The combination of wet cool conditions has slowed durum seeding to a snail’s pace. Although the deadline for full crop insurance coverage passed on June 5, seeding has continued, according to the U.S National Agricultural Statistics Service. NASS last Monday (June 24) reported North Dakota durum seeding had increased from 88 to 93 per cent complete.

Late seeding tends to reduce yields as the crops mature in hotter and drier conditions that limit kernel filling. In 2011 when North Dakota planting was similarly delayed, yields dropped to 26 bushels per acre, six bushels below average.

The reduction in acres was also seen in other durum growing states of Idaho, Montana and South Dakota, though the acres lost in those states are far less than in North Dakota.

For the crop that has been planted so far this season, crop conditions in North Dakota are mostly ranked good.

“Desert durum” shortfall

U.S. durum is mainly produced in two separate regions, with the Northern Plains accounting for three-quarters of the crop and remainder coming from “desert durum” production in Arizona and California. Extensive drought has limited yields and area in both states. USDA estimates desert durum production around 15 million bushels, compared to a recent average of 25 million.

Jerry Klassen, manager of Canadian operations for Swiss-based GAP SA Grains and Produits, said low U.S. durum acres “will be somewhat supportive for prices, but overall durum will get dragged down by bearish outlook for corn, wheat and cereal complex. We may see durum prices divorce themselves from spring wheat values.”

Klassen said Canadian durum farmers will be looking for some price support from this report, but values in the U.S. will likely be higher than Canadian elevator prices.

Recent durum prices in Canada have been quoted at C$7.95 per bushel. In the Northern Plains, published elevator bids averaged US$8.83 per bushel compared to an average of $7.67 for spring wheat.

“The U.S. market needs to maintain a premium over the Canadian market to stimulate Canadian imports,” he said.

Earlier in the week Statistics Canada estimated 4.9 million durum acres would be sown in 2013, an increase of 200,000 acres over the previous year.

With acreage indications clearer on both sides of the border, the focus will turn toward growing conditions.

— Stuart McMillan writes from Winnipeg on weather and agronomic issues affecting Prairie farmers.

Related story:
Fall-harvest corn plunges as USDA shocks with acres jump, June 29, 2013

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But average doesn’t count when most of the rain comes in just a few hours, which was the case for many areas last week. While the most dramatic events were in southern Alberta, there were reports of saturated soils or flooding in parts of Saskatchewan and Manitoba as well.

The flooding in Alberta is described as the worst ever been recorded, partly due to the heavy rain in the mountains in the west of the province. According to the AgroClimatic Information Service of Alberta Agriculture and Rural Development, since April 1, 300 to 500 mm (12-20 inches) of rain have fallen in the area. This is close to the amount that would normally be seen in six months, but most fell in the space of a couple of weeks. The precipitation across the foothills and mountains June 20 is described as very high to the wettest on record.

The floodwaters are receding and the impact is starting to be assessed. “We don’t have a clear idea on the agricultural impact yet as so many of the people in the affected areas are involved in emergency operations.” said Neil Whatley, a provincial crop specialist at Stettler, Alta.

According to the Government of Canada agroclimate impact reporter, only one Alberta district was reporting severe flooding. In Pincher Creek, it’s estimated that more than 30 per cent of crop/pasture land is flooded, with crop losses likely.

Prior to the flood, crop conditions were generally described as good and in parts of the south were in need of rain.

Some analysts anticipate that overall, this year’s weather will benefit Alberta crops. In 2005, the last year Alberta had a significant flood, provincial crop yields were 120 to 140 per cent of the previous five-year average.

“For many of the southern agricultural areas the amount of rain received this season is unusual, but by no means catastrophic. The rain was an amount the soil could handle,” Whatley said.

Manitoba

In Manitoba, heavy rains over the weekend generated some localized flooding in the west of the province and caused the rural municipality of Pipestone to declare a state of emergency.

Excess moisture is also a problem in the northwestern agricultural region of Manitoba. Marnie McCracken, a farm production adviser with Manitoba Agriculture, Food and Rural Initiatives at The Pas, said farmers in the area were dealing with moisture from two different sources.

“There was a major rainfall event over the weekend that brought 100 to 125 mm of rain resulting in many fields being inundated with water. Then there is the water received from the west along the Carrot and Saskatchewan Rivers.”

Most of the area is protected by a system of dikes, recently elevated to protect against Saskatchewan River flooding higher than 2011. However, they will not prevent against extreme rains or saturated soils.

“Even in the flood-protected areas, we are seeing significant standing water in crops,” McCracken said.

In Saskatchewan, no widespread flooding is reported, but no area is reporting topsoil moisture in the short or very short status. The Saskatchewan government crop report for the period of June 11-17 reported localized flooding in most districts.

“Weeds are rapidly growing and some producers are concerned they may not be able to spray fields on time due to wet conditions,” the report said.

— Stuart McMillan writes from Winnipeg on weather and agronomic issues affecting Prairie farmers.

Related story:
In pictures: Southern Alberta in deep, June 24, 2013

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Multiple agencies anticipate exports from both countries to rebound following last year’s drought.

In Ukraine, barley production is forecast to remain similar to last year — around seven million tonnes, according to Ukraine’s Agriculture Minister Mykola Prysyazhnyuk. The U.S. Department of Agriculture has the same expectations for barley production in the country.

USDA projected total Ukraine wheat production at 19.5 million tonnes. Tetiana Adamenko, head of the agrometeorological department at the Ukrainian Weather Centre, estimated wheat production at 20 million tonnes. Ukraine’s wheat production in 2012 had dropped to 15.8 million tonnes.

Winter cereal acreage in the country has faced significant competition from surging corn and soybean acres.

USDA’s forecast was for Ukrainian barley exports to drop 200,000 tonnes from 2012, to two million tonnes. It predicted wheat exports to increase one million tonnes from 2012 levels reaching a five-year high of eight million tonnes.

Production and exports were even more severely curtailed in Russia last year. In 2012 wheat production was 30 per cent of the previous five-year average, while barley dropped 15 per cent. Exports of all crops dropped in 2012 as Russia responded to the disappointing harvest.

USDA estimates exports of Russian barley to increase to 3.8 million tonnes, and wheat exports to increase nearly seven million tonnes, reaching 17 million tonnes. The rise in exports occurs while Russia simultaneously aims to replenish dwindled stocks with purchases of up to five million tonnes.

The southern harvest is strategically important, as the majority of the region’s grain production is exported, since it’s located close to Black Sea ports and far from most domestic mills.

Although volume is anticipated to increase, quality will return to more normal lower levels. Last year’s drought boosted protein content and grade in wheat, increasing the proportion of milling wheat. Feed wheat is anticipated to increase to about 50 per cent, Adamenko said.

Price indexes across the former Soviet republics dropped in response to the harvest forecast. The values for feed-quality winter cereals will be further impacted by the potential for record corn output from the region.

Corn area has continued its yearly increase in both countries. Corn production may jump by close to 5 million tonnes in Ukraine and 1.5 million tonnes in Russia.

Exports of corn may exceed 16 million tonnes, according to the latest USDA report. If this is achieved, Ukraine will be the fourth largest corn exporter in the world following the United States, Brazil and Argentina.

— Stuart McMillan writes from Winnipeg on weather and agronomic issues affecting Prairie farmers.

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