Corn prices popped sky high this week, nearing a one-year high at $4.38 per bushel. Ongoing wet weather continues to plague Midwestern farmers, and many will be unable to plant their corn crop on time. Only 58% of the crop had been planted as of last weekend, the slowest pace on record. Current estimates are that nearly 10% of this year’s expected crop could go unplanted, and much of the remaining late-planted or waterlogged corn could suffer from lower yields.
As a result, market watchers fear that corn supplies could be extremely tight in the U.S. this fall, potentially the lowest level in a generation.
Adding fuel to the rally was a recent announcement by the Trump administration that it was going to allow higher ethanol blends to be used year-round. Most U.S. ethanol is made from corn and is then blended into gasoline; ethanol demand has exploded during the last 20 years and now accounts for nearly 40% of all U.S. corn use, a figure that could rise after the new rule is implemented.