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Summary
Prices of wheat, corn and soybeans rose by about 2 per cent last week, defying expectations of ample global supplies. The rally is being driven by growing concern over persistent dry weather across key crop-growing regions in the US and Canada, linked to the ongoing La Niña pattern.
La Niña Triggers Prolonged Dry Conditions
Since late summer, large parts of North America have been experiencing persistent dryness. This has extended through autumn and winter, leaving soil moisture levels poor across major agricultural regions in the US Midwest, the Plains, Canada, and parts of the Pacific region.
Cold conditions combined with below-normal precipitation have resulted in prolonged drought-like conditions. Farmers are increasingly anxious that the pattern may not reverse before spring, when warmer temperatures raise crops’ water needs.
Warm Temperatures Add to Crop Stress
Since late December, temperatures across many US crop regions have remained above normal and, in some cases, near record highs. These warmer-than-usual conditions have continued into January, affecting winter wheat areas in particular and adding stress to already dry soils.
Weather experts warn that dryness is likely to persist through the rest of winter. Northwesterly air flows could further delay moisture recharge across North American crop belts.
Limited Near-Term Relief
While snowfall is forecast in parts of Canada, analysts say it may not be sufficient to meaningfully improve soil moisture. Drew Lerner of World Weather Inc. notes that weather patterns from February to April will be critical to restoring moisture levels across crop regions.
World Weather Inc. expects some improvement in US weather conditions later, though parts of the Midwest could eventually turn too wet. However, meaningful relief is unlikely before spring.
Wheat Regions Most Vulnerable
Hard red winter wheat regions are particularly sensitive to the continuation of La Niña. The longer the phenomenon persists, the greater the risk that timely rainfall will be delayed, potentially impacting yields. Adequate moisture in the coming weeks is crucial for crop development.
Looking Ahead: El Niño on the Horizon
Once the current dry phase ends, forecasters see a higher probability of El Niño developing during July–September. This could bring heavy rains and flooding to North America, with implications for the next crop cycle.
Conclusion
For now, La Niña-driven dryness is beginning to influence agricultural markets. Even with ample global supplies, weather risks are providing fresh support to grain prices. If dry conditions persist into spring, the recent upward momentum in wheat, corn and soybean prices could strengthen further.