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Soy, corn futures spike on scorching Midwest weather – Sober Look

This is a syndicated repost courtesy of Sober Look. To view original, click here. Reposted with permission.

Here we go again. While the early part of the US Midwest summer has been fairly benign for crops, farmers’ luck has run out in late August. The central part of the US is experiencing a broad heat wave, putting a number of crops at risk.

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After what happened last summer (see post), this is particularly an unwelcome development. Crop conditions have been decent through early August, but all that is about to change.

Corn crop conditions by years (source: USDA) – Crop conditions in many key areas may be going from bad to worse in the next few days. Temperatures will scrape the triple-digits around the nation’s center to begin this week. With the exception of a quick pass-through by a “weak cool front” bringing some spotty showers later in the week, the weather will remain hot and dry for the next week and a half or so, forecasters say.

Prices on soy, corn, wheat, and other grains spiked this morning as a result – with the soy crop being particularly vulnerable at this stage. Here are the most active contracts for corn and soy.

Source: barchart

This does not bode well for emerging economies who import some of these products and have recently experienced significant currency depreciations.

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