Chicago maize (corn) futures plummeted to seven-week lows on the 1st of September 2021 to a weekly average price of USD 212.82/MT, as Hurricane Ida hit the southeastern US, shutting down oil and grain terminals, damaging equipment along the Gulf Coast, and causing power outages. The Gulf Coast is home to US key ports and terminals, and accounts for 50-60% of US grain exports. If the disruptions continue, this could lead to an oversupply in the US market just as the Midwest Corn Belt growers begin to harvest.
The impact of Hurricane Ida was widely seen across other planted US crops such as rice, soyabean, and wheat, which led prices to fall to their lowest levels in several weeks at the end of August. The main reason for the price decline is the expected low export rates due to the impact of the hurricane. In addition, lower demand from China, which actively bought US agricultural products last year during this period, has further weighed on prices.
Weekly crop estimates released by the United States Department of Agriculture (USDA) on 30th August revealed that 60% of the US maize crop was in good condition, unchanged from the previous week. Chicago maize prices have been on a downward trend since May 2021 amid an uncertain demand outlook and weather-related supply bottlenecks. This is the longest downward trend in prices this year. Prices for US maize are expected to continue falling in the short term because of the logistical problems in the Gulf area, which will likely impact farmers’ ability to export, leading to an oversupply in the domestic market.