Drought 2012: Corn Prices At Record Levels

The worst drought in a half century will continue to plague most of the U.S. Midwest crop region for at least the next 10 days, with only occasional showers providing some relief mainly in the east, an agricultural meteorologist said on Thursday.

America’s top two corn and soybean producing states, Iowa and Illinois, are now in the center of the drought as the dryness spreads to the northwest to leech what little moisture remains in already parched soils.

“It looks a little wetter today for Michigan, Indiana and Ohio, but the west is still dry with above-normal temperatures,” said Jason Nicholls, meteorologist for AccuWeather.

Rain for the next 10 days will run the gamut from just 40% to 75% of normal, with the greatest stress in the western Midwest crop states such as top producer Iowa.

“It got up to 102° to 103° F in Iowa yesterday with no rain, and will be in the 90s today with no rain,” Nicholls said.

Rainfall overnight Wednesday left up to 1.5 inches in Chicago and an inch in Rockford, IL. “Only isolated rains, no drought buster,” he stressed. In addition to rain in northeastern Illinois, showers fell in southern Wisconsin, Indiana and southwestern Michigan.

“It will be cooler on Friday but the heat will be back for the weekend into early next week. The 11- to 15-day forecast shows the ridge moving west over the Rockies so that may help cut back on the heat, but there is still no significant rain in sight,” he said.

An atmospheric high pressure ridge has entrenched itself over the heart of the U.S. corn and soybean producing states, preventing moisture from moving into the crop belt, leading to a buildup of heat, causing crop losses and spawning record-high corn and soy prices.

Commodity Weather Group (CWG) on Thursday predicted the heat would last longer next week than had earlier been forecast.

More than half of the Midwest was severely dry.

“The most concern is in west central Indiana, much of Illinois, far northern Missouri, most of Iowa, southwest Minnesota, southern South Dakota, Nebraska and Kansas,” said CWG meteorologist Joel Widenor.

Chicago Board of Trade (CBOT) corn has soared nearly 50% in just six weeks to a record high $8.08-1/2 per bushel on Thursday, besting the previous record of $7.99-3/4 set 13 months ago.

CBOT soybeans notched record highs for two days in a row reaching a peak of $17.23 per bushel on Thursday, above the previous record of $16.85-1/2 hit the previous day and up 30% since early June.

As the drought, rated the worst since 1956, expands to the northern and western Midwest, areas that had previously been spared, analysts were slashing corn yield estimates by the hour. Some were also starting to cut their forecasts on the number of acres that will be harvested as farmers opt to plow under some of their parched fields to claim insurance.

The USDA, in its weekly crop progress report issued on Monday, said that just 31% of the corn crop was in good to excellent shape, down from 40% a week earlier and below analysts’ average estimate of 35%.

Soybean conditions fell to 34% from 40% in the good-to- excellent category, likewise below estimates for 35%.

The National Oceanic and Atmospheric Administration (NOAA) said in a report on Monday that, based on the Palmer Drought Index, 55% of the contiguous United States was under moderate to extreme drought in June. That is the largest land area in the United States to be affected by a drought since Dec. 1956.

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