The U.S. is the world’s largest producer of field corn. Oppressive heat and a worsening drought in the Midwest region where corn is the predominant crop, has pushed prices near records as crops baked, burned and wilted. Concerns are growing about food and fuel inflation as drought conditions now extend over more than 60% of the lower 48 states, with no ending in sight. Crops are likely to continue to be stressed by frequent episodes of near-100-degree temperatures and limited rainfall moving forward through the middle of August. Corn prices have jumped more than 50 percent in the last month as the crop wilted in many locations during its key growth stage of pollination.
There also is a direct link between corn and ethanol prices which is exacerbated by the Renewable Fuel Standard (RFS) program regulations, which increases the volume of renewable fuel required to be blended into transportation from 9 billion gallons in 2008 to 36 billion gallons by 2022. On Wednesday, U.S. Agriculture Secretary Tom Vilsack said the situation wasn’t bad enough to warrant a reduction in government mandates for how much ethanol is blended into gasoline.
What’s next as temperatures remain high and rain clouds remain scarce? The future of this year’s soybean crop. Soy prices are on the rise as the same hot, dry weather chokes soy’s future as well. Soybeans are grown in many of the same regions across the U.S. as corn, but the key growing phase for soybeans does not start until later in the summer.
Only 40% of the nation’s corn and soybeans were in good or excellent condition at the beginning of this month, the lowest for that date since 1988 according to government data. The implications for the world food system of U.S. crop losses are massive. The United States exports more than half of all corn shipped worldwide and is a major supplier of soybeans to China. PIERS solutions provides the support needed to accurately track specific commodities, such as corn and soybean.
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