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US farmers face 'huge' impact from flooding

Corn prices are on the rise.

Corn (C=F) futures have jumped more than 20% from their mid-May low, driven in part by heavy rains and flooding across the Midwest and Great Plains.

The largest U.S. crop in terms of total production is corn, but with weeks of heavy rain deteriorating field conditions, many farmers have been kept from planting crops. According to government data, just 67% of the nation’s corn crop was planted as of June 2, down from the 5-year average of 96% by this time in June.

Scott Shellady, Senior Vice President of Derivatives at TJM Investments, told Yahoo Finance’s “The Ticker” that the flooding is having a “huge” impact on America’s farmers.

“It’s the wettest we’ve ever seen. We’re going to get a corn crop in the ground but these things slowly take time to develop…. We just don’t know how bad this is going to be until we see the yields at the end of the year.”

“We’ve got a lot of corn acres that haven’t even been planted yet. Those are going to be big problems going forward as well. We’re not going to have anywhere near the amount of corn that we thought we were going to have at the end of this year.”

In this May 29, 2019 photo, a field is flooded by waters from the Missouri River, in Bellevue, Neb. Thousands of Midwest farmers are trying to make decisions as they endure a spring like no other. (AP Photo/Nati Harnik)

And the fallout from deteriorating corn crops could trickle down to the consumer, meaning Americans could eventually feel the pinch at the grocery store.

“Things with corn in them will surely go up in price, but this is going to take time to develop. It’s like that big ball on ‘Raiders of the Lost Ark’— It’s rolling, it’s slow, it’s huge…. It’s definitely going to be a problem, there’s no denying that, but it’s still going to be a story that takes time to develop.”

It’s important to note that the massive flooding isn’t the only thing causing chaos for farmers. The Trump administration’s tariff war is the other issue farmers are scrambling to deal with. In a recent report from the USDA, corn and wheat exports for fiscal year 2019 are forecast to drop. Corn exports are expected to fall by $1.4 billion to $10.4 billion and wheat (ZW=F) is forecasted to drop by $1.2 billion to $6.3 billion, on lower volumes and unit values.

In terms of whether trade or the flooding is having a bigger impact on commodity prices, Shellady said weather is having a short-term impact on crops like corn, while the trade war has the potential to inflict long-term pain for commodities including soybeans (S=F).

Seana Smith is the anchor for The Ticker.

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