New crisis is starting in the USA – commodity one this time. There is a mass decay of corn crop around the country. If drought starts in Central America, wheat and soy crop may also be lost. American farmers that grow corn are at the verge of bankruptcy, as high temperature does not seem to fall and precipitation to appear.
It should be remembered that the beginning of summer is the period of pollination and ear binding, but extreme heat hinders further development of plants. Let us remind that similar situation was observed in America in 1988. Price per bushel has currently risen by 41 percent.
Not everyone eats corn, but it is added into 75 percent of products that undergo technological processing. The fact that corn is used for feeding livestock is also of great significance. All this may result in higher prices for milk and meat products, and we can already observe the rapidly rising prices for commodities since the beginning of the year.
The weather that has currently set in the central part of the country is absolutely untypical for the region and is similar to the drought in 1936. If the weather does not change in the nearest future, crop may be lost, as corn cannot be grown in the condition when precipitation is below 2.5 cm for six weeks and the temperature is 40°C.
Indiana corn crop is in critical condition. If pollination does not happen, one may no longer hope for any yield.
Only several northern states have not faced drought. Experts unanimously claim that consumers will suffer a lot, as most products contain corn. It also contains ethanol and is used for feeding poultry. It is used for producing band aids, cold medicine, envelopes, dry batteries, ink, paint, aluminium, aspirin, cloth, make-up, penicillin, carpets, powder, wallpaper, tooth paste, stamps, and vitamins.
There is no doubt that not only Americans will be influenced by such poor yield, being unable to freely buy hamburger, butter, and eggs; consumers around the world will also be influenced. America is the largest supplier of corn worldwide.
Corn prices have currently risen by 30 percent. Only 40 percent of corn crop is growing in normal conditions. Prices for milk products, meat, and poultry have already started rising.
Speaking about global situation, Stavropol Territory, for example, has declared a state of emergency. Harvesting has not even started when drought has already brought done the damage that amounts to 20 billion rubles.
According to data provided by the Argentine Ministry of Agriculture, as of June 21, 73 percent of corn has been collected, which is 12 percent less than last season due to the consequences of lasting extreme humidity. Brazil has not yet provided any data on its harvesting campaign.
Consequently, according to Commodity Trading Department of , corn market is currently facing the situation of speculative growth, which is connected with drought in the USA.
