Anomalous weather conditions in the ASA resulted in the severest drought in 50 years. Obviously, this will lead to higher foodstuff prices and external trade deficit.
In Chicago, the price of the soybean futures contract for November delivery reached $602 per ton, thus breaking the price record set in 2008.
According to the preliminary forecast provided by the USDA, up to 40% of crops can be destroyed. 29 states (55% of the US territory) are now suffering from droughts.
The USDA has already downgraded the production forecast for wheat 6 million 7000 thousand tons. The biggest damage is expected to be done to the harvest of corn and soybeans. The production forecast has been lowered down to 12.97 million bushels.
Due to unfavorable weather conditions, Russia, China and Ukraine will lower their production of wheat as well.
Higher food prices may destabilize the political and economic situation in importing countries.
According to , the USD index is seeing a downtrend. The closest levels of support are located at 82,67 and 82,44. In order to reverse the downtrend, the price will need to consolidate above 83,46.
