The Midwestern region of the United States has experienced uncharacteristically hot weather in the last few weeks, which are a crucial time for crop farms. The region otherwise known as the Corn Belt has seen record temperatures reach over 105 Fahrenheit in recent weeks as reported by Reuters.
Drought conditions in the past week across the central United States have intensified, causing damage to crops in Missouri, Indiana and Southern Illinois. Some farmers are being forced into cutting stunted corn for silage, a low grade feed for cattle. The percentage of corn rated Good to Excellent dropped by 8% this week to just 40% and with the forecast of rain expected to miss the areas where it is most needed crop conditions look set stay at dangerously low levels.
The question now for corn crop is ‘just how low will stocks be?’, a stark contrast to initial expectations of a record harvest for 2012.
Corn prices closed at $6.72 per bushel and increased by 21.0% in June due to a substantial deterioration in crop conditions reports AGWeb.com. Fears of tight supplies have also left soybean prices higher, in June prices rose by around 13% just close at $15.13 per bushel.
Wheat stocks as of June 1, 2012 were estimated at 743 million bushels, a 14% decrease from a year prior leading to a 14.2% increase in price for this month at around $7.39 per bushel.
In an exciting first day at Cereals 2012 the event welcomed Dan Basse, President of AgResource Company. In a talk hosted by Agri Intelligence, the leading commentator and adviser to the UK and Chinese governments addressed Cereal 2012 visitors on World Food Supply and Demand.
His talk covered global crop marketing prospects saying that the key factors driving prices for the foreseeable future would be a combination of weather (in terms of drought and moisture stress in key production regions), biofuels and their demand for agrimony-based feedstocks and South East Asia and in particular China.
He focused more of his comments around wheat supply and demand taking in corn and soybean production towards suggestion of the current volatile period for grain prices and a bullish period ahead for wheat in particular.
The Ag President stated that two-thirds of a cereal farmer’s net revenue in the USA now arises from marketing activities. Based on his calculations he also mentioned, that GM technology in grain production had not delivered any corresponding increases in yields, however they had taken some of the volatility out of seasonal variation in output.
Mr Basse also took time to visit the IMD stand and meet our directors who were pleased to welcome him to IMD and discuss international milling. He will return to his home town Chicago, USA, having no doubt enjoyed his time at Cereals 2012 and even the UK weather!