If the hot and dry weather pattern so far this summer continues, the possibilities of flirting with $10 per bushel corn and nearly $20 per bushel soybean futures prices could become a reality, according to some analysts.
Meatingplace.com reported the predictions, which were expressed during Tuesday’s panel discussion at the Chicago Mercantile Exchange (CME) ahead of the USDA’s World Agricultural Supply and Demand Estimates report released on Wednesday.
AgResource Company President Dan Basse and Founding Principal of The Hightower Report Terry Roggensack see a dismal trifecta forming as heat, drought and timing in key corn and soybean states are setting up to be an unwelcomed scenario of crop losses far worse than those in previous drought years, such as 1988.
“We haven’t seen heat and dry gang up like this before,” Roggensack told Meatingplace.
Currently, soil moisture profiles are the lowest reported since 1895. We have also experience second driest June since the Dust Bowl. These factors combined with excessive and persistent triple digit heat leaves Basse amazed by the crop losses already this season.
According to Basse, he has never seen crop losses this large occur in such a short amount of time.
“We are seeing fields in Illinois and Indiana we think will yield nothing,” he said, noting that as recently as the beginning of June, it looked as though a huge corn crop was on the way.
Basse predicts corn and soybean futures markets to remain high for months to come. He expects to see $8 to $9 per bushel corn and $17 to $19 per bushel soybeans, though he admits that “we don’t know how high is high.”
Roggensack expanded further on the possible impacts on these markets from a futurers market charting point of view, noting that when all-time-high price levels are breached, those prices are often exceeded by 20 percent. According to Roggensack, that opens the door to $9.50 to $10 corn and soybeans just under $20.
An informal poll conducted on Dairy Herd Network’s web site asked readers if corn prices would exceed $8 per bushel at some point this year. Of the 79 votes, 70 percent did expect it to exceed $8. Check out the poll here.
Sister site PorkNetwork also polled visitors, asking them how high they thought corn prices would go this year. Twenty-five percent in this poll believed that corn prices would reach $10 per bushel, matching Roggensack’s prediction.
Analysts also predicted an average national corn yield of around 140 bushels to the acre, assuming ideal conditions moving forward. However, current weather forecasts aren’t as optimistic. Basse notes that data from the National Oceanic and Atmospheric Administration show that much of the country needs 15 to 20 inches of rain.
Current 10-day forecasts show little chance of any rain falling across the Midwest.
“It is really getting too late to help this corn crop,” said Basse. “You might fill out a few kernels better, but it won’t cause much of a change in the corn yield.”