A smaller than expected planted area estimate and concerns about hot and dry weather in key maize growing regions in the US drove prices up to more than a three-month high on 1st July, to $141.9/MT. This represents a significant increase of 13% between 26th June and 1st July.
The US maize price rose following the release of the USDA acreage report, which stated a maize planted acreage of 92 million acres, down from the previous March forecast of 97 million acres. According to the USDA, this is the biggest March-to-June drop since 1983.
In addition, higher-than-average temperatures and precipitation across the US corn belt have raised concerns around maize yield. This is particularly the case with the crop now at the pollination stage, when it is highly sensitive to hot and dry weather.
However, the US maize market remains pressured with large supplies after the coronavirus pandemic impacted maize-ethanol demand. Also, a higher production is anticipated for the 2020/21 marketing year despite a lower acreage than expected, thus setting a bearish outlook. The CBOT maize price has recently lost $3.15 on 8th July (2.2% w-o-w), trending at $138.7/MT, as demand from the ethanol sector remains sluggish.
In addition, the number of COVID-19 cases surged in the US. As of 21st June, the number of cases had increased by 25% compared to the previous week. If these numbers continue to rise, lockdown measures could be reintroduced across the country, thus impacting fuel consumption and consequently maize prices.