Drought in the US Corn Belt remains a watch-out factor for the 2022/23 season

The maize price on the Chicago Board of Trade (CBOT) dropped by 6% week-on-week (w-o-w) to USD 263.5/MT on the 28^th of June 2022, with better-than-expected conditions of the US crop that has eased concerns over world supplies. In the latest (27^th of June) USDA weekly Crop Progress report, maize was rated at 67% good-to-excellent conditions, down 3% w-o-w. This compares with the previous year’s average of 64% good-to-excellent condition.

According to the US Drought Monitor, at the start of June 2022, the US Midwest region was 9% in dry to drought conditions and increased to 25% on the 21^st of June 2022. According to various weather reports, June 2022 could be viewed as the 6^th warmest and 3^rd driest month in 30 years. However, as July begins, the hot weather temperatures are estimated to cool down but will likely remain above normal. In July, US maize goes into the pollination phase, a critical stage to determine yield potential, which could be critical this season due to hot and dry weather. Thus, the weather remains a watch-out factor in the short term. If weather conditions remain unfavourable, US maize yields could be reduced, causing maize prices to increase.

                                                                                                                                                                                              
                                                                                                                              Source: Mintec Analytics