Corn prices are skyrocketing right now. This is a result of a new release of the United States Department of Agriculture (USDA) WASDE report. Wheat and soy prices are following this price increase. How did that happen?
Corn prices have shown a strong price increase in recent days, which is caused by expectations that the United States corn stockpiles will be at their lowest point in 6 years. The USDA has lowered its 2019/2020 ending inventory forecast by 32,5% from previous estimates. This is mainly due to sowing delays and lower yields.
Due to the sowing delay, the USDA expects that approximately 1,2 million hectares of corn cannot be sown. Lower corn yields are also currently expected on a global scale. This is partly due to the sowing delays in Canada. The corn price therefore rose by almost $11 per ton on Tuesday, June 5.
The wheat price also showed an increase on June 11 and is almost $4 per ton higher. Finally, the price for soy also showed an increase. This is partly due to the fact that when one product is scarcer, there is more demand for other raw materials. Analysts are also talking about higher feed costs.
More demand for wheat
Since there is more demand for it wheat expected, US wheat stocks for the 2019/2020 season have been reduced by 6%. This reduction was greater than expected, which is an additional reason for the price increase. In contrast, expectations for wheat yields have increased. The global harvest forecast has also been increased by 4,9 million tons.
The expectation for the soybean harvest in the United States remains almost the same, although it is not yet clear whether these sowing delays will have an impact on this crop. Lower soybean production is expected worldwide, partly due to lower yields in Ukraine.