The global corn market may see 60 million metric tons “disappearing” as drought cuts the U.S. harvest, said Australia & New Zealand Banking Group Ltd.
The harvest in the U.S., the largest corn grower and exporter, will probably drop 20 percent to 25 percent this year, after drought cut wheat harvests in the Black Sea region, Paul Deane, an agricultural economist at ANZ, said in an interview with Susan Li on Bloomberg Television’s “First Up.”
“We’re seeing two very big holes in the grain production side,” Deane said, referring to losses in the U.S. and the Black Sea. “Overall, we’re likely to see further gains for grains and oilseeds.”
Corn, which surged to a record $8 today, has soared more than 55 percent since June 15, signaling higher food prices and boosting expenses for producers of livestock feed and ethanol. The grain is in the fourth year of a bull market, heading for the longest rally since 1964. The drought that prompted the U.S. to declare almost 1,300 counties in 29 states as natural-disaster areas, may cause a global grains shortage, according to Commonwealth Bank of Australia.
Global corn production was estimated by the U.S. Department of Agriculture at 905.2 million tons earlier this month, before drought worsened in the Midwest. Total use was forecast at 900.5 million tons, the agency said.
Deane’s estimate for a loss of 60 million tons is more than double the harvest in Argentina, the second-largest shipper. Argentina was predicted to produce 25 million tons in 2012-2013, according to the USDA.