In the world of crops, angst over the weather has reached a fevered pitch.
'Every bushel matters' as drought keeps crop markets on edge
With demand and prices high, very hot weather so early in the summer is already raising doubts about output on U.S. farms this year.
By Kim Chipman
June 12, 2021 at 1:00PM
Global inventories are shrinking and demand is on a tear as drought plagues farms in key producers from the U.S. and Brazil to Russia.
As a result, every rain shower and dry spell is coming under extreme scrutiny. Grain prices have touched near-decade highs, and whether they rally to further heights or retreat depends in large part on the condition and quantity of plants over the next few months.
In the U.S., traders and investors usually focus their attention on giant corn and soybean growers like Iowa and Illinois. Now, they're obsessing over droughts in second-tier producers like North Dakota and Minnesota.
Dry weather has already inflicted damage on South America's corn crop. Meanwhile, there's no let-up in demand as China scours the globe for all the grains it can find as it tries to modernize and feed its hog herd, the biggest in the world.
"Every bushel matters," said Kevin McNew, chief economist at agriculture-tech firm Farmers Business Network, "even though we may be talking about drought in lesser-growing corn and soybean areas like the Dakotas."
In the U.S., growers are nervously watching to see if extreme drought in western states and North Dakota spreads deeper into the central Farm Belt.
Hot weather over the next two weeks in those key corn-growing areas will lower yields if there isn't enough rain, said Jacqueline Holland, an analyst at Farm Futures.
There is some hope for relief. Unlike the last major drought in the U.S. in 2012, when lower-than-normal humidity levels reduced rain, moisture from the Gulf of Mexico this year could create conditions for "typical summertime rainfall" in the central and eastern Midwest, according to Dan Hicks, meteorologist at Freese-Notis Weather in Des Moines, Iowa.
Danger zones for dryness are in the northwestern Midwest and Northern Plains, he said.
In North Dakota, searing temperatures and lack of adequate rain have hurt crop progress.
