Corn crops in Midwest regions suffered from one of the hottest in more than 50 years, which greatly reduced production of the commodity yet drove its prices to record highs, according to published reports.
Bloomberg reports the U.S. Agriculture Department is likely to reduce the monthly crop forecast on September 12 again after having done so last month as well. Thirty analysts polled by the news service estimated the reduction would bring down production 2.8 percent from 12.914 billion bushels to 12.554 billion bushels.
That would push corn inventories to their lowest level in 15 years, survey results indicate.
Regions of the Midwest suffered their hottest temperatures in at least 100 years while the two U.S. states that grow the most corn have seen prices increase at minimum 71 percent during the past 12 months. Iowa and Illinois saw those increases prior to kicking off the harvest, which beganin September.
"The crop could get smaller, and that will increase risks for prices to move higher," grain research director Dan Cekander with Newedge USA in Chicago told Bloomberg. "Supplies will be tight for another year, and that puts a premium on adding acreage next year and producing a big crop."
At 12:23 p.m. on Thursday, corn futures dropped 1.84 percent, a 13.75 cent slide to $7.3425 per bushel.
Reuters attributes corn futures' drive to the commodity market's bounce back from dour economic circumstances in the U.S. and Europe.
One analyst cited the rough condition of corn crops and stated that factor is likely to drive corn prices higher.
"We've seen some private forecasts for lower than (current) USDA yields on the corn side and the USDA crop progress report showed crop conditions deteriorating," Rabobank analyst Erin FitzPatrick told Reuters on Wednesday. "I think those factors are giving a bit of an upside to prices today."
The commodity is staring at "pressure from the fast-approaching harvest in the Midwest, which has begun to temper prices in the cash markets," Phillips said.
In addition to hot temperatures, a lack of rain also is playing a central role in the life and times of corn futures, according to Bloomberg.
While Iowa and Illinois endured temperatures that were as many as 6 degrees Fahrenheit higher than July temperatures typically register, Ohio and South Dakota have farms have not had normal amounts of rain since the first day of July.
The heat during the month of July proved to be harmful to corn during its reproductive phase, according to an agricultural meteorologist in Rockville, Maryland.
Kyle Tapley told Bloomberg that each ear of corn has fewer kernels due to damage caused by the heat. During the earlier part of the growing season, flooding and colder temperatures delayed planting. He reduced his crop estimate from last month from 12.223 billion bushels to 11.914 billion bushels.
An Illinois farmer told Bloomberg his yields are likely to be one-quarter lower than the 200 bushels per acre that he's seen for five years. Leon Corzine said inclement weather damaged his crops but he'll have a plentiful supply to meet demand.
"The heat and the dryness really hurt our crops, with the high nighttime temperatures restricting conversion of plant sugars into kernels," the past president of the National Corn Growers Association told Bloomberg. "We won't run out of corn. People just won't get as much at the prices they want to pay. There is supply rationing already happening."