Searing global temperatures are damaging prospects for corn growers in key markets, which could provide a boost to U.S. exporters anticipating a record crop.
Global corn production is expected to decline this month in areas including Ukraine and the European Union as excessive heat and dry weather have led to significant crop stress, according to a report from the U.S. Department of Agriculture on Monday.
Persistent dry weather in Europe’s “breadbasket” has sapped soil moisture and is expected to drive production in Ukraine down 14% from last year. Major producers Paraguay and Romania could see up to double-digit percentage declines in production and yield over the previous marketing year, the USDA said.
The unfavorable weather conditions have made U.S. corn prices more competitive on the global stage, which could be a bright spot for exporters as they struggle to offload a significant surplus. A record harvest last summer, combined with expectations for another bumper crop this year, has fueled a domestic corn glut, muting farm prices and profits.
U.S. corn production is forecasted to drop just 1% from last year’s bumper crop, with yields expected to hit a record 183.1 bushels per acre. Multiple major corn producing states in the Midwest are anticipating record yields, according to the USDA’s National Agricultural Statistics Service.
“You have to go outside of the heart of the Midwest to find any real problems with this crop,” Brad Rippey, USDA meteorologist, told the agency’s radio service. Early heat and drought largely hurt growing conditions in the Southeast, with states such as North Carolina reporting a majority of their crop to be “poor to very poor.”
A contraction in global corn supply has pushed up global prices in all major exporting countries, though the increase was minimal for the U.S. Ukraine bids increased 10% to $205 a ton over the past month, with bids in Brazil and Argentina up $5 and $4 a ton, respectively.
U.S. bids experienced the smallest increase, up just $1 a ton to $182, and are “currently the most price competitive on expectations of plentiful supplies,” the USDA said. Still, the U.S. season-average farm price is down 10 cents to $4.20 per bushel, underscoring headwinds facing growers as they brace for reduced profits.