Corn prices burst higher this week, reaching levels not seen since last summer. Prices have been climbing consistently for almost two months as concerns mount about weather problems in South America affecting the upcoming corn harvest in Brazil and Argentina.
On Thursday, the U.S. Department of Agriculture updated its estimates, cutting the crop size again from both countries. Brazil and Argentina are two of the world’s largest grain growers and major competitors for U.S. exports. The drop in their crop sizes inspired corn buyers, and led that market to its biggest one-day gain in over six months, climbing over six cents per bushel on Thursday.
Agricultural markets were also relieved by a softening of President Trump’s proposed tariffs against imported steel and aluminum, noting that he would not apply the tariffs against Mexico or Canada, two of the United States’ largest trading partners. Many in the agricultural industry worried that the tariffs would spark retaliation by trade partners, who might impose their own tariffs against U.S. exports like corn, soybeans, beef, and pork.
U.S. farmers may still face threats from tariff retaliation, falling demand, or another year of huge U.S. grain harvests. Fear of losing the current profitable prices is prompting many to sell stored grain or use markets to lock in current levels for this fall’s crop via the December corn futures contract, which traded Friday for $4.08 per bushel.