By Joanna Newman
A SWELTERING heatwave across the cornbelt has triggered a dramatic rally in US maize prices over the past week, as farmers now face a significant reduction in yields.
On Monday, the US Department of Agriculture confirmed widespread reports of crop damage caused by the extremely hot, dry weather during the pollination stage of development.
In its weekly crop conditions assessment, the government agency rated only 63% of the growing crop as good to excellent, down sharply from 70% last week.
The downgrade was more severe than many market-watchers had expected and prices have soared in anticipation of lower supply at harvest time
The Chicago September futures contract climbed from around 195¢/bushel a week ago to over 230¢/bushel on Tuesday, 3 August, its highest level since April, before settling back down to 219.5¢/bushel at the close of trade on Tuesday.
With most of the maize crop at the silking stage, it is now too late for a complete recovery, even if farmers enjoy cooler, wetter weather in coming weeks. Conditions have also increased the risk of crop disease.
Meanwhile strong exports are lending their support to US maize values. In the week ended 22 July, the US sold 49 million bushels of maize for export, up from 43 million bushels last week.