The scorching temperatures across the globe are wreaking havoc on corn growers in important markets, potentially giving a boost to U.S. exporters who are expecting a bumper crop.
A recent report from the U.S. Department of Agriculture revealed that global corn production is set to decrease this month in regions like Ukraine and the European Union due to extreme heat and dry conditions causing significant crop stress.
The ongoing dry spell in Europe’s “breadbasket” has depleted soil moisture levels, leading to a projected 14% drop in production in Ukraine compared to last year. Other major producers like Paraguay and Romania are also expected to see significant decreases in production and yield, as stated by the USDA.
The challenging weather conditions have made U.S. corn prices more competitive internationally, offering a silver lining for exporters grappling with a surplus. Despite a record harvest last year and expectations for another abundant crop this year, the domestic market is flooded with corn, dampening farm prices and profits.
While U.S. corn production is forecasted to dip by only 1% from last year’s record crop, yields are projected to reach an all-time high of 183.1 bushels per acre. Several key corn-producing states in the Midwest are anticipating record yields, according to the USDA’s National Agricultural Statistics Service.
According to Brad Rippey, a USDA meteorologist, the majority of the crop outside the Midwest is faring well, with the Southeast experiencing challenges due to early heat and drought conditions. States like North Carolina have reported a significant portion of their crop as “poor to very poor.”
A decrease in global corn supply has led to a rise in prices across major exporting countries, with minimal increases seen in the U.S. Ukraine saw a 10% increase in bids to $205 a ton, while Brazil and Argentina experienced $5 and $4 increases, respectively.
Despite being the most price competitive due to expected ample supplies, U.S. bids only rose by $1 to $182 a ton, with the season-average farm price dropping by 10 cents to $4.20 per bushel. This highlights the challenges faced by growers as they prepare for reduced profits.