Western Canadian Weather Playing Large Role In Winnipeg Commodity Exchange Commodity Price Trends

WCE's new-crop commodity values increased, setting numerous new contract highs during the month of July, as well as reaching price levels not seen in a number of years. Weather has played a key role in the up trend in Winnipeg commodity prices, as a heat wave swept across the prairies from late June through the first part of July.

Not only has weather been playing a large role in the market with respect to expected yields, but Canadian crop acreage estimates for the 2002 crop are being questioned. There appears to be much uncertainty regarding actual harvestable acreage due to poor seeding conditions in the spring, increasing reports of crop abandonment, and green-feed salvaging activity. The questions and uncertainty surrounding acreage levels and yields will likely remain in the coming month as new data will not be available until the next Statistics Canada Crop Production report is released on August 23, 2002.

American growing regions have also been experiencing extremely hot and dry weather over the past month, resulting in a general deterioration of US crop conditions. These crop conditions have been reflected in prices. Crop condition reports in the US show that the largest portion of corn and soybeans are rated as poor to very poor with crop conditions being compared to the drought of 1988. The impact of the hot weather on the American crop will be better known on August 12, 2002 when the United States Department of Agriculture (USDA) releases its next Crop Production report.

Weather rallies are common in the marketplace at this time of the year, however the mounting evidence of irreparable crop damage is supporting continued price strength at levels that may ration demand. The window of opportunity for better weather conditions to improve potential North American yields is quickly coming to an end for 2002.