This morning, the Department of Agriculture lowered its projection for the nation’s corn production by 12 percent.
The worst drought in a quarter century will slash corn yields across the U.S. Midwest by much more than most analysts had expected, the government said on Wednesday in a report that reignited a record rally in grain prices.
The U.S. Department of Agriculture said the crop will average just 146.0 bushels an acre, down 20 bushels from its June estimate.
As a result, USDA reduced its forecast for corn ending stocks by 37 percent from last month, partly offset by lower exports and less ethanol usage.
The surprisingly deep cut to the yield outlook sjolted [sic] traders, who had expected the USDA to take a more conservative approach to adjusting its outlook. The reduction in ending stocks was deeper than the 32 percent cut expected by analysts.
Corn on the Chicago Board of Trade soared after the release of the report, with the December contract initially surged by 23 cents and settling to a 15-cent, or 2 percent, gain at $7.76 a bushel gain at mid-morning. Prices have risen 34 percent in the past four weeks.
Here’s how corn futures have performed over the past few weeks. Since mid-June, prices have risen over 25 percent.
But: There’s good news about almonds!