"We Need Rain": Corn, Soy, Wheat Prices Soar As Drought Conditions Worsen In Midwest

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by Tyler Durden
Thursday, Jun 22, 2023 - 11:20 PM

Corn, soy, and wheat prices have been soaring this month as growing conditions across the Midwest, a top-producing crop region, have rapidly deteriorated due to the lack of rainfall.

US corn crop rated good to excellent slid to 55% in June, the lowest for this time of the growing season since 1992, reported Bloomberg. 

"I'm very concerned about the weather," said Sherman Newlin, who grows corn and soybean in Illinois. He said persistent "low humidity, 90-degree temperatures and now the wind is sucking the moisture out of crops really fast." 

Corn growing conditions have been terrible in Illinois, the second largest US producer. About 36% of the state's crop was rated good to excellent for the week ending June 18, down 12 percentage points versus the prior week. 

"I was shocked at the big drop in Illinois ratings," Newlin said. "I knew we were bad, but: Wow."

The latest U.S. Drought Monitor Map reveals Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, and Wisconsin, often called the "Corn Belt" states, are experiencing "moderate drought" to "exceptional drought." The timing of the worsening drought could stress young plants. 

We've outlined for readers the worsening drought situation and its subsequent effect on crop price volatility:

"There's little sign of relief for crops in the forecast," Bloomberg wrote in a note. 

Prices of wheat futures are up 20% on the month. Soy futures are up 14%. Corn futures are up 13%. 

The official summer start was Wednesday, which will coincide with hotter and drier days. 

Bloomberg warned: "Without substantial rain in the next month or so, the consequences could be dire, with farmers abandoning their fields and the harvest plunging."