Welcome to The Weekly Harvest, where we recap this week’s hot topics in the crop market. Here is the recap for this week:
1. North Dakota’s Drought Area Expands
According to the latest U.S. drought monitor map published April 1, 2021, 47% of North Dakota is facing extreme drought, making it the largest area impacted in the last two decades. Winter cereals are most affected, with winter wheat crop condition ratings falling from 13% good-to-excellent last week to 9% (good-excellent) this week. Producers will start planting spring crops over the next week and will need moisture soon after.
Producers in North Dakota grow similar crops to those sown in western Canada (spring wheat, durum, lentils, peas, and dry beans), making North Dakota a direct export competitor to Canada. This means that a drop in North Dakota production potential could reduce export competition for Canada.
2. Morocco’s Cereal Production
Morocco’s cereal production is expected to improve after two years of drought. Moroccan producers seeded 4.2 million hectares of cereal crops in 2021, which include:
• 1.68 million acres of soft wheat
• 925,000 acres of durum
• 1.43 million acres of barley
Beneficial rainfall has improved crop potential and the Moroccan government forecasts cereal production climbing to 9.5 MMT, well above the 3.2 MMT produced last year. FarmLink projects the crop could top 10 MMT. [SC4]
Due to the multi-year drought, Morocco imported considerable volumes of grain, including Canadian durum. Canadian durum exports to Morocco reached a record high in 2019/20 at 900 KMT and exports are on pace to top 1.1 MMT in 2020/21. An improved Moroccan production result will reduce Canadian export potential.
3. Ocean Freight Rates Rising
Ocean freight rates for bulk commodities including grains and oilseeds increased by 50% this year, partly because of a pickup in Asian manufacturing. Although the impacts of the COVID-19 pandemic are still at play, the global vaccine response is improving the outlook to get back to business as usual.
Consumer confidence is increasing, and people are expected to purchase more goods and services this year. The International Monetary Fund’s latest economic outlook forecasts an 8.4% rise in goods and services trade, compared to an 8.5% drop in 2020.
Ocean freight rates are projected to rally well into 2022. For Canadian agricultural exports, higher ocean freight rates are negative. Canadian exports tend to travel farther than our competitors to reach end-user markets. Canadian competitiveness diminishes with higher ocean freight costs.
Information contained herein is believed to be accurate but is not guaranteed by the parties providing it. Farm At Hand, FarmLink, and their information sources assume no responsibility or liability for any action taken as a result of any information or advice contained in these reports, and any action taken is solely at the liability and responsibility of the user.