US Corn Conditions Suffer Sharpest Deterioration In Three Years, Fueling Food Inflation Fear

Less than a week after we reported that an options whale placed a $20 million bet on corn futures, a new U.S. crop report revealed the sharpest weekly deterioration in conditions in three years.

Bloomberg cites a new USDA report that rated 63% of the U.S. crop as good or excellent, down 4 percentage points from the previous week and below consensus estimates. The decline was due to heat and dryness battering some of the nation’s top agricultural growing belts.

1YR Net Change Corn Crop Yield Forecasts

The most-active contract gained as much as .9%.

Heat warnings plague parts of Illinois and Missouri, although Corn Belt weather is expected to improve later this week.

Last week, an options trader made a $20 million bet that corn futures will surge to their highest since 2023, as reduced U.S. planting, record exports, and heat-damaged crops tighten the supply outlook. The trade involved 105,000 November $5.50/$6 call spreads, equivalent to more than 500 million bushels.

The Bloomberg Agriculture Spot Index (BCOMAGSP) recently hit a three-year high. This dollar-denominated benchmark tracks 10 major agricultural futures, including Chicago and Kansas City wheat, corn, soybeans, soybean meal, soybean oil, coffee, cocoa, sugar, and cotton.

Read our latest note on BCOMAGSP, where traders are increasingly focused on maritime chokepoint disruptions, El Niño risks, and extreme heat gripping key growing regions across the U.S. and Europe.

Bank of America: The Timing Of The Next Grocery Inflation Surge Revealed By BofA.