One of the worst droughts in 30 years has damaged U.S. corn crops and keeps lifting prices higher.
Agricultural focused exchange-traded products or ETPs like the Teucrium Corn (NYSEArca: CORN) have soared 43.14% over the past three months. The Teucrium Soybean (NYSEArca: SOYB) is ahead by 12.17%, while the broader agricultural basket (NYSEArca: TAGS) is up by 19.03% over the same time frame.
The U.S. Department of Agriculture (USDA) has cut its forecast for corn production to a total of 10.779 billion bushels of corn, which is around 40% less than its spring forecast of 14.8 billion bushels. The USDA’s outlook now expects a yield of just 123.4 bushels per acre, push production to a 17-year low.
The shrinking crop has pushed corn prices to record highs. It’s also created food supply disruptions for the livestock industry, food makers and ethanol producers (NYSEArca: XLE).
The USDA also reduced its forecast for soybean production to 2.692 billion bushels, down from its July forecast of 3.05 billion.
The U.S. drought has been accompanied by global weather problems elsewhere. A heat wave in Russia is impacting global wheat prices (NYSEArca: JJG) and rain in Brazil is damaging sugar crops (NYSEArca: JJS).
Broader based commodity index funds have rallied too. The GreenHaven Continuous Commodity Fund (NYSEArca: GCC) the iShares GSCI S&P Commodity Index Trust (NYSEArca: GSG) are up around 3.75% over the past three months.