Wheat, corn and soybean futures in the United States have all taken a breather this week, after the record heights set for corn and soybeans last week.

Australian markets have also had a correction this week with new crop wheat APW1 track on the East Coast down $15/t but still trading $305/t.

The main reason for the selloff has been profit taking with hedge funds selling their long positions at record levels. Also, rain has been forecast for the US Midwest corn belt. Yet again talk of Spain and troubles in Europe are also affecting market sentiment.   

To put the US drought into prospective, consider the numbers that are apparent so far.

Last year the US produced 314 Mmt of corn (36 percent of world production in 2011 of 873Mmt of corn).

In early June the USDA forecast a record corn crop with an estimated 96 million acres planted.

However, by yesterday that expectation had been downgraded to a harvest of 84 million acres.

Yields were initially forecast to be around 166 bushels per acre, or 375Mmt corn crop in total.

Much now hangs on the next USDA report out in early August, which will detail the volume in bushels lost to drought and extreme weather.

Speculation out of the US yesterday had yields at around 130 bushels per acre, or a total corn harvest of 277 million tonnes.

That means that potentially 98 million tonnes of corn has been lost to drought.

To put that into perspective, consider that Australia’s total annual crop of wheat, barley and sorghum totals around 36 million tonnes.

More volatility in our markets is certainly as further US reports are released. 

• Prices quoted in this column are of an indicative nature only to illustrate trends and do not represent a definitive buy or sell price at a given point in time. For specific prices for your region contact the author at luke@robinsongrain.com.au or (07) 4659 0755 or twitter @lukergtgrain