Weather is once again proving its dominance in influencing international grain markets.

Dryer than usual weather across South America has become an increasing focal point for global grain markets of late.

Despite the harvest wrapping up in Europe, it has yet to begin in most areas there.

Argentina

Argentina, for example, has had very little rainfall for the last five months. The AHDB reports that, while there have been a few showers in central and southern regions, the north is still in a state of drought.

In its September report, Bolsa de Cereales rated 40% of the wheat crop in poor or very poor condition, compared with just 18% last year.

In addition to this, last week the USDA revised Argentinian wheat production down one million tonnes (Mt) on the back of weather concerns.

However, despite this revision, an estimated 19.5Mt production still pegs it higher than pre-2018/19 levels.

Brazil

Dryness concerns have delayed maize plantings, with heavier rains in Mato Grosso, the country’s largest maize-producing state, not forecast until mid-October.

Conditions across Brazil, the world’s third-largest maize producer, have been hot and dry in central and northern regions, with some recent rains in southern regions.

Despite this, supported prices have helped increase intended planted area this season, with production predicted to be 8% higher than last year’s record crop at 110Mt.

La Nina

The risk of La Nina developing by October and continuing into early 2021 in increasing.

If realised, this will lead to drier than usual weather across Argentina and southern Brazil and increased rainfall across the northern regions.

Despite the Argentinian wheat harvest still being a couple of months away, prices may see some support if this dry weather continues, potentially impacting yield potential, the AHDB reports.

Conversely, however, this could be mitigated if rainfall occurs in a timely fashion across key wheat regions.