Farmers and traders were anxious about the "heat dome" that hit the Midwest earlier this week. Both crops are at a critical stage, and high temperatures now can drastically reduce crop yields. Even though one might expect the prices for corn and beans to rise due to the heat, the opposite occurred.
The drop was caused by a much shorter heat wave than meteorologists originally forecasted, combined with forecasts for less extreme temperatures and more rainfall in the coming weeks. The "threat" of better weather has some analysts thinking that this could still be a bumper crop for both corn and soybeans, which has sucked dry the weather premium that was factored into prices.
Exports, already sluggish, were hurt further by our strong US dollar, which makes US crops relatively more expensive in the global marketplace.
As of midday Friday, corn for December delivery was trading at $3.40, down 18 cents on the week, and soybeans for November delivery were trading at $9.77, down 80 cents on the week.
Hog Market Falls Apart
The hot weather is also discouraging cookouts, reducing meat demand, which has added to the backup of hog supplies plaguing the market.
The large number of heavy animals ready for slaughter has caused the recent drop in prices to turn into a rout this week. Shoppers should notice a further price decline in pork chops, hot dogs, and ribs due to another four cent per pound drop in August hog futures this week.
Though shoppers enjoy cheaper prices, the drop could decimate hog producers and eventually undercut demand for corn and soybean meal, thereby hurting grain farmers as well.
Gas and Diesel Drop
Consumers should also benefit from a continued decline in the price of both unleaded gasoline and diesel fuel.
These fuels are on the downward slide due to overwhelming supplies that could balloon as the seasonal peak driving season is coming to a close. With fewer drivers hitting the open road, fuel prices have been on the decline, reaching multi-month lows.