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Corn Surges to Five-Year High on Lower Production, Flooding

June 14, 2019 at 13:21 by Andrew Moran

Corn futures are trading at their best levels in five years, driven by lower US production and flooding in the Great Plains and Midwest that is impacting corn planting levels. While tumbling output might not be horrendous for the market, analysts do say that fears and hoarding could push the market into panic mode.

July corn futures rose $0.0525, or 1.19%, to $4.4725 per pound at 12:55 GMT on Friday on the Chicago Board of Trade (CBoT). Corn prices are on track for a weekly gain of about 8%, contributing to their stellar performance in 2019. Year-to-date, corn is up nearly 20%.

According to the US Department of Agriculture (USDA), domestic corn production is anticipated to be at its lowest level since the 2015–2016 marketing year. The “World Agricultural Supply and Demand Estimates Report” found that corn output is expected to tumble by 1.4 million bushels to 13.7 billion in the 2019–2020 season.

The report further highlighted that a “larger-than-expected reduction in corn yield and acreage” is expected in future reports. This has Ned Schmidt, editor of the Agri-Food Value View Report, warning that emotions in the market will run high in the near-term.

U.S. corn will be in short supply, but emotions, fears, and hoarding could push it to shortage.

In a separate report, the USDA found that corn planted in the 18 states that represent much of US production was at just 83% for the week ending June 9. This is down from 99% at the same time a year ago. Experts note that this is the most amount of corn acres left unplanted this late in the season in recorded history.

So, what is contributing to these bearish trends? Flooding in the Great Plains and Midwest are leading to a slower pace of corn planting. It is estimated that as much as $3 billion in property damages occurred because of the severe flooding, but the region could endure more pain. The weather forecasts that another bout of heavy rainfall might happen in the coming days, which could inflict even more damage.

In other agricultural commodities, July wheat futures edged up $0.0175, or 0.33%, to $5.3725 per bushel. July soybean futures tacked on $0.04, or 0.45%, to $8.92 a bushel. July orange juice futures surged $0.0195, or 1.9%, to $1.047 a pound.

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