What We're Watching This Week - April 24, 2017

CLIMATE-COMMODITIES

Morocco’s Wheat Is in Need of Rain

Vegetative indices are flashing warning signs in Morocco, as the country’s wheat crop comes into the home stretch. With over 80% of agricultural production rainfed, below average precipitation during the past two months hasn’t helped matters. The most problematic areas are situated across five provinces that account for roughly 30% of Morocco’s total wheat production and a good portion of its durum wheat production. We recommend millers, grain handlers, and logistics groups keep a watch on daily rainfall and 8-day NDVI conditions in Gro.

FOOD

Taking a Pulse of Lentil-Chickpea Demand:

US growers are expected to increase acreage planted to lentils by almost 25% from last season, despite a sharp fall in Indian prices. Chickpea acreage is also projected to jump by 53% from a year ago. Statcan’s forecast shows area planted to pulses, the edible seeds of legumes, in Canada, falling year-over-year by 17%. That’s good news for US growers, but US export demand has been slowing in recent months. As such, farmers are gambling that the trend towards healthy snacking (i.e. hummus spreads) will continue. Since the USDA’s demand outlook could impact US prices, we suggest growers, food manufacturers, and retailers keep a close eye on the USDA’s biannual Vegetables and Pulses Outlook to be released on Friday.

CASH CROPS-BEVERAGES

Will Tea Prices Keep Boiling Up?

Production in one of India’s top tea growing areas, Assam, likely fell year-over-year by 50% in March. Heavy rainfall has significantly reduced the initial flush (harvesting of tea leaves) from Darjeeling and Assam’s tea plantations in March and April when prices are usually at a premium. India’s woes follow falling production in Kenya this year and a major drop in Sri Lanka’s output in 2016. As such, we would expect tea prices to climb higher. We would encourage global beverage companies and retailers to focus on the Colombo auction in Sri Lanka where prices recorded their highest level ever in March.