The most widespread drought in a decade is dividing the U.S. farm sector into winners and losers. With more than half of U.S. corn and soybean acreage facing drought conditions, some farmers are calculating whether insurance payments will cover the cost of the crops they have sown this year. As of June 27, 65% of the Midwest was in a moderate drought or worse, the broadest area in a decade, according to the U.S.
Drought Monitor. The U.S. Department of Agriculture said 70% of the country’s corn production area and 63% of soybeans were affected by drought. Around a third of winter wheat grown in the U.S. is expected to be abandoned, according to federal data, because the poor quality isn’t worth the cost to harvest it this year. That would represent the highest rate of abandonment since 1917. Farmers whose fields remain green, however, are set to pad their incomes. Farmers outside of drought territory could get another year of solid income just as corn prices were on the decline, said Scott Irwin, an agricultural economist at the University of Illinois Urbana-Champaign. Higher prices for crops also Archer Daniels Midland and Bunge as concerns over supplies prompt grain buyers to make advance purchases.
ADM is estimated to earn more than $3.7 billion in profit in its 2023 fiscal year, while Bunge is expected to make $1.8 billion for the year, according to FactSet. ADM and Bunge had no comment. “We don’t see weather volatility getting any better,” said Bunge Chief Financial Officer John Neppl at a May investor conference. “When you have a global platform like we do and you have all the origin-destination combinations that we can put together, that really bodes well for a business like ours.”