On Tuesday, corn prices went up amid the worst drought experienced in the Midwest, which brought up issues for the crop this year.
Corn futures for July delivery increased by 1.32% to $604.90 per metric ton on June 06’s Asian afternoon session.
The National Integrated Drought Information System (NIDIS) reported an early warning. It states that 27.00% of the Midwest was experiencing a drier-than-normal period, possibly leading to a drought. Also, 9.00% of the area is already experiencing unfavorable weather situations.
Furthermore, if the dry temperatures continue, the country’s corn production will not reach the US Department of Agriculture’s forecast. As a result, the crops will be negatively affected since they could face the worst drought in 30 years.
According to experts, their high temperatures reach through the northern plains of the Midwest. As a result, it does not only impact corn and soybeans, but it weighs on other soft commodities as well.
However, he added that this situation was not unusual, and they witnessed it before. Still, they need rain this summer if they want healthier crops.
Based on analysts, the possibility of an ongoing drought can cause a 10.00% to 15.00% reduction in corn volumes. They said the prices would continue to rise, not only because of lesser harvest but also the expected commercial withdrawal.
US Crop Conditions Worsen, Pulling up Corn
A weekly government report announced that the Chicago corn rose due to an aggressive decline in the US crop. The dry weather in the grain belt caused this.
The dry spell in the US is pulling up corn and soybean prices despite being early as the crop was just planted. According to experts, the market is building on some weather premium.
Based on the ratings from the USDA, about 64.00% of the harvests were in good to excellent condition. This was stated on its weekly crop report, showing a 5.00% drop from the past week.
On the other hand, weaker demand for US products like grains and oilseeds limited the positive potential in prices. On Monday, the USDA’s weekly export inspections for corn dipped to 1.18 million tons. It is a lower result than last week’s 1.35 million tons.