Corn, wheat and beef markets are all suffering from droughts that will impact productivity, according to the latest report from Rabobank.
The quarterly Rabobank Agribusiness Review notes that in late July, some 54% of the U.S. cattle herd was under from drought conditions. As a result, cow slaughter is on pace to reach 13.5% this year – the highest culling rate on record. Even with the extra slaughtered beef coming on the market, prices for fed cattle are up 20% so far, in recognition of the fact that fall slaughter is likely to be smaller.
Corn crop conditions are the worst they’ve been since a widespread drought in 2012. The corn yield is projected to be below 170 bushels per acre, which would bring the total yield below 1 billion bushels, the second-lowest on record.
The wheat market is being affected by drought and the war in Ukraine. A recent agreement to allow grain shipments through Ukraine’s ports will ease some of the pressure, but high temperatures and low rainfall will continue to depress the U.S wheat crop.
“Without significant rainfall in the next 30 days, the 2023 U.S. hard red winter wheat crop will be planted in dust,” the report says. “A recipe for another tough crop production year and a strong support for prices.”