Drought and high temperature areas of South America are causing agencies to cut forecasts for corn and soybeans.
Conab just made a drastic cut of 15 million tons for Brazil’s soybean crop, while USDA reduced its forecast by 5 million. USDA Chief Economist, Seth Meyer, says the South American weather issues are “price positive” for U.S. Growers.
“I think the dry conditions and the downgrading over the last couple of months of the South American crop has provided general price points, we’ve seen general commodity price support, and we’re entering, ya know we’re in the month where for some row crops, the insurance discovery prices is also being set, right?”
Meyer says when analysts make a forecast, they don’t want to predict what the weather will do. Instead, they base decisions on how the weather has already impacted the crops so far.
“And now we’re entering into kind of this crucial phase where I think we still could have changes, both in a positive and negative direction. We assumed normal weather, but I think it is a crucial couple of weeks, and I think the focus will remain on South America over the next 30 days.”
He says USDA will continue to monitor the situation and offer updates throughout the growing season.
Related:
South American Crop Production Outlook a Tough Nut To Crack
U.S. Drought Monitor Hits Hot New Record
Argentina Grain Inspector Strike continues to impact markets