Drought Imperils Crops and Mexico’s Rates Outlook

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Drought Imperils Crops and Mexico’s Interest Rates Outlook

By Blu Putnam, Chief Economist
Norland, Senior Economist
CME Group

Drought Threatens Farmland In Dakotas

  • Western U.S. drought is worsening, spreading toward Dakotas.
  • Drought could damage corn and soybean crop yields, reduce production.
  •  Drought driving up corn, soybean prices already elevated by Chinese demand.
  • Water supply might be affected in some regions while raising electricity prices.
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Mexico Might Raise Rates

  • ​​​​Traders expect Mexico to have raised rates by 1% by this time next year.
  • Mexico’s tourism sector could get substantial boost from U.S., Canada.
  • Mexican peso has recovered most of its pandemic losses to U.S. dollar.
  • Flat yield curve signals low expectations for Mexico’s near-term growth prospects.
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