Market Impacts: Weather takes the driver seat on market pricing
As the season progresses, the primary driver for commodity markets is switching from concerns regarding COVID-19 to concerns regarding spring weather. USDA crop progress report for the week showed winter wheat crop good to excellent crop condition drop to 57% from 62% the previous week. Markets are watching spring precipitation in Europe, the Black Sea region, and South America with growing concerns. This has provided some strength to the markets for winter wheat. Although spring wheat planting is at 7%, well behind the average of 18% for this time of year, it appears that any concerns are limited, as the Minneapolis markets continue their downward trend since the end of March 2002.
As noted in previous updates, Russia has implemented a quota on exports of grains for the period of April 1 to June 30, 2020 that is in line with export amounts from previous years. However, stronger than anticipated demand for grains has analysts expecting that the Russian export quota may be reached by mid-May. The impact of reaching this limit remains a point of debate, with some asserting that this will provide strength to markets and others expecting that wheat exports from the European Union will be ready to meet any demand that the Russians refuse to fill.