The report has already jolted the market once this year. With world crop inventories at risk of running short and food inflation worsening, corn futures leaped close to eight-year highs on March 31, when the U.S. shocked the market by not projecting as many planted acres for the new season as expected. Crop prices have recently retreated, but the chance of worsening drought is putting daily weather forecasts in the spotlight.
Thursday’s report, however, may not provide a lot of clarity, as the U.S Department of Agriculture may want time to monitor weather patterns as it prepares a highly anticipated June 30 forecast update on planted corn and soybean acres. The agency will likely take a “wait-and-see approach,” according to Ken Morrison, a St. Louis-based independent commodity trader.
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.
Originally Appeared Here