Agricultural commodities surged higher again this week as drought conditions continue to cause deteriorating crop conditions and yield prospects.
Monday’s crop condition report showed that corn and soybean ratings are at their lowest levels since 1988. Both corn and soybean contracts traded into new contracts highs this week, while wheat prices reached their highest levels in just over a year.
In Wednesday’s USDA report, corn yields were slashed 20 bu./acre, to 146, while total production was cut 1.82 billion bushels. Soybean yields were cut by just over 3 bu./acre to 40.5, while production was cut by 155 million bushels. All wheat production was trimmed by 10 million bushels to 2.224 billion.
Look for prices to remain very volatile as the market seeks out levels where demand for the limited supplies are adequately rationed. Despite ethanol production being at two-year lows, I’d guess corn prices are likely to make higher highs next week.
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