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Dry Weather and Drought Market Impacts

Dry weather and drought in the Midwest is reaching a critical point, according to University of Illinois Agricultural Economist Gary Schnitkey, who says yield loss could be coming quickly in his state.

He says; “Most of Illinois is in a moderate to severe drought. And if we don’t get rain in the next week or so, we’re going to be looking at some lower yields. And right now, there is a possibility that a 2012 style drought may be an offering for 2023.”

That holds true for much of the Midwest and the Corn Belt, which should be enjoying a wet season thanks to El Niño. Schnitkey says markets are reacting to the dry weather; “We saw new crop December 2023 corn contract go from $5 in mid-May and now it’s back up close to $6. And if we continue to see dry weather, you can expect to see that continue up, particularly if we’re looking at a widespread drought.”

If the drought this year follows 2012, Schnitkey outlines what to expect from the market; “The harvest price was 32 percent higher in 2012 for corn, and that would result this year in a $7.80 harvest price. Soybeans rose 23 percent during that year. Having said that, any rain will cause that to go away.”

He adds that the Midwest in June of this year has more reported drought conditions than in 2012, according to the Drought Monitor.

Story provided by NAFB News Service and Todd Gleason, WILL, Urbana, Illinois

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