Exchange traded funds that track the price of grains were bouncing back Wednesday from earlier losses this week with rain and more rain in the forecast. Nevertheless, the damage from the U.S. agriculture belt’s worst drought in 50 years has already been dealt.
“Early losses have started to turn around as the grain markets are torn between extremely alarming supply situation on one hand and expectations that current prices will induce demand rationing on the other hand,” Luke Mathews, a commodities strategist at the Commonwealth Bank of Australia, said in a Reuters report. [Grains ETF Spikes 10% on Week on Midwest Drought]
The wetter weather has come a little too late. For corn, the summer scorcher devastated crops during a key pollinating period.
The U.S. Department of Agriculture cut U.S. corn yield by 12% to 146 bushels per acre from 166 bushels due to summer heat. [Corn ETF Rally Fizzles After Harvest Forecast Cut]
“The corn, especially, has already taken quite a bit of damage. The rains can’t improve the corn crop but it can still help the beans,” Indiana farmer Brian Scott said in a Reuters article.
“It’s perfect timing to really rejuvenate the soybeans,” Phil Sutton, St. Joseph County Purdue Extension office educator, said in a South Bend Tribune report. “They’ll just be starting into the flowering and reproductive periods. Whether it will be a bumper crop or not, I really doubt that. But it is going to save the beans.”