Soaring temperatures centred in the central Plains but spreading over much of the United States this week have officials warning people to take precautions to avoid heat stroke.
However, crop prices this week were hardly reacting. The heat comes as corn is pollinating and soybeans are about to go into their reproductive stage.
Corn and soybean futures did rise a few weeks ago when the heat first entered the long-range forecasts, but values later fell as rain also entered the outlook, lessening the impact of the scorching weather.
Also, the duration of the extreme heat has been reduced from initial outlooks. The temperatures in the high 30s to low 40s C will likely last only three or four days. High humidity accompanied the heat, increasing the misery for people.
As predicted, rain did fall on the weekend.
“The U.S. Midwest received some welcome rain over the weekend, as did parts of the Southeast and Delta. Temperatures are expected to periodically rise above 40 C,” said Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia.
“The market will remain at the mercy of the weather models.”
The crop market is fixated on the longer-term weather forecasts. Some indicate that August could be hotter than normal.
“The corn and soybean markets are currently being tossed back and forth by varying weather forecasts,” Commerzbank said in a note.
“Sentiment is alternating as investors weigh up the impact of showers in the short term against that of the hot weather forecast for the coming weeks.”
At the same time, there is strong demand for U.S. corn shipments amid lower production in rival supplier Brazil.
With the weather looking less stressful for crops, the big trading funds are reducing their bets that crop prices will rise.
Large speculators cut their net long position in Chicago corn futures in the week to July 12, regulatory data released July 15 showed.
The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, increased their net short position in Chicago Board of Trade wheat and cut their net long position in soybeans.
The wheat market is being weighed down by ample world supplies and record yields being reported from the harvest of hard red winter wheat crop in the United States.
The market is keeping a close watch on Argentina’s grain truckers who went on strike July 18 over hauling rates, underscoring the difficulty of reaching wage agreements in a country with double-digit inflation.
The strike was not expected to immediately affect shipments from Argentina, one of the world’s biggest soybean and corn exporters, but it could start to bite as stockpiles are depleted.