Daily Chemical Reaction
Hot Pocket! US Crop Conditions Plummeted In June, Bio-Product Seller Heartburn Risk Has Risen For 2H23
- Drought conditions and a heat wave hit most of the US in June, putting its crop production at risk and lifting electricity demand. The June impact on crop production will unlikely fully reverse.
- US crop prices have fallen from recent 2H23 highs but remain significantly above pre-COVID levels – we view current prices as more favorable for future farmer spending than most views.
- High crop prices will likely lift the debate surrounding food prices and biofuels (and other bio-based products), as both compete for inputs that will need to be shouldered by the consumer.
- The current Texas heatwave and record electricity use reflect positively on solar and wind power producers, but concerns about the variability of their electricity generation remain.
- US chemical and grain rail traffic remains lower than 2022 on both a YoY and YTD basis, with domestic chemical demand falling short of supply and grain supply falling short of demand.
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