Effects of extreme heat events on crop revenues for U.S. corn and soybeans

Extreme weather events have nuanced implications for crop producers. While they can reduce local yields, widespread production losses often drive price increases. This study presents a panel approach that accounts for the price–yield correlation to assess the impact of such events on crop revenues, focusing on U.S. corn and soybeans. It conducts two key analyses: (1) quantifying the revenue impacts of the historic 1988 and 2012 U.S. heatwaves and (2) examining the implications of climate change on crop revenue variability. The results show that compensatory price increases often substantially offset yield losses, especially when price responsiveness to supply shocks is strong. In particular, U.S. corn in 2012 and soybeans in 1988 saw crop revenues rise by more than 8% compared to normal weather conditions, whereas U.S. corn in 1988 and soybeans in 2012 experienced decreases of no more than 4%. The study highlights the importance of crop‐specific and time‐varying price responsiveness to supply shocks. Furthermore, it demonstrates that if growing season weather during 1997–2019 had exhibited the volatility projected for 2036–2065 under a moderate emissions scenario, revenue variability for corn and soybeans in median U.S. counties would have increased by more than 60%, with more pronounced impacts in regions outside the major Corn Belt. These findings underscore the significant economic risks posed by climate change–induced variability in agricultural revenues.