Corn Prices Rally as Weather Setbacks Keep Markets on Knife-Edge

Corn futures prices are touching new contract highs as worrisome weather conditions in the US and Brazil underscore concerns about adequate US corn supplies after the fall harvest. 

Gro data shows colder than normal conditions in the US Corn Belt, which could slow planting progress, and depleted soil moisture levels in parts of the region that could reduce 2021 production. In Brazil, where crops have faced plenty of adverse weather this year, dry conditions in the country’s south could stunt the second corn crop, known as safrinha. Gro’s Drought Index shows the most distressed areas are in Mato Grosso, Mato Grosso do Sul, Minas Gerais, and Sao Paulo states, the crop’s principal growing regions. 

December 2021 CBOT corn futures are trading at new contract highs on these less-than-ideal weather conditions, while old crop corn futures close in on the $6/bushel mark, the highest price seen since 2013. Gro’s analysis of global supply/demand has been predicting that near-perfect weather will be needed this growing season to ensure sufficient US supplies in the fall. 

In a year of shrinking corn stocks, planting pace is important. A slow start to US planting would raise questions about whether farmers will be able to increase acreage beyond the planting intentions the USDA published at the end of March. Since that report, corn prices have rallied nearly 15%. You can follow Gro’s data on US planting progress across key regions of the Corn Belt. 

The global demand pull for corn remains strong, and the USDA recently lowered estimates for world corn ending stocks to 283 million tonnes, the fifth straight year of declines. If Brazil’s corn production comes up short, that would lead to more exports out of the US at a time when the US old crop balance sheet is currently the tightest since the 2013/14 crop year. Brazil’s FOB corn export price is near its highest of the year, indicating elevated concern for the crop. Follow Gro’s Brazil Corn Yield Forecast Model for daily updates of corn yield estimates at the district, province, and national levels.

This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.