While a wet June has put Australia on track for consecutive bumper winter crop harvests, variable weather is wreaking havoc on grain crops in other parts of the world, with drought and scorching heat in parts of North America slashing grain production estimates.
At the same time, Europe and the Black Sea are expected to see large harvests following mild and wet growing seasons.
Wheat, canola and barley production hopes across large areas of the Canadian Prairies and the U.S. Northern Plains are hanging by a thread. Farmers are holding out for rain in the coming weeks to save crops. They are calling it the worst drought in decades where poor rainfall, heat and winds are rapidly eroding yield potential.
In its recently released July supply and demand estimates report, USDA said production forecasts for durum and spring wheat were in significant decline due to the severe drought conditions affecting the Northern Plains.
US spring wheat production is projected to tumble to 8.3 million tonnes, making it the smallest harvest in 33 years if realised, and 39 per cent below the five-year average yield.
USDA adopted a more cautious approach with its forecasts for Canada's wheat, canola and barley crops, where they trimmed yields by about 1.5pc from the previous month.
Provincial crop reports in Canada show the drought will significantly impact yields and production.
Canola and spring wheat yields are expected to be slashed when the full impact of the drought and scorching temperatures is realised.
Grain production outlooks in other parts of the world have been more favourable.
European wheat output is set to recover from last year's drought with the USDA projecting production to climb by 10-pc or around 12 million tonnes.
Black Sea wheat production is also expected to lift with another large Russian harvest and an improved crop in Ukraine.
Black Sea wheat production is also expected to lift...
New crop grain prices have come under pressure as the looming Black Sea harvest pressures global prices.
Export quotes for Russian wheat declined by around US$15 a tonnes to $235 FOB Black Sea in the second week of July, which is the lowest point since October last year, according to the International Grains Council.
International barley values came under pressure with the looming Black Sea harvest and limited export demand. Black Sea barley prices have fallen by around US$40/t since mid-June.
US futures markets have been torn between the dry weather in Canada and northern US and big crops in Europe and the Black Sea.
