Midwestern drought may cut into nation's corn supply
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WASHINGTON -- The drought in the Midwest that has pushed up corn prices 28 percent since June 15 may eventually rival a dry period in 1988 that cost agriculture $78 billion, a government meteorologist said.
This year's weather pattern, which settled into the Great Plains and the Southwest last year and has spread into the Corn Belt, resembles those of a quarter-century ago, National Weather Service drought specialist Matthew Rosencrans said Wednesday at a forum in Washington.
Sparse rainfall may drive crop costs up further, destroying livestock profits and raising food prices, Texas A&M University agricultural economist David Anderson said. Corn "stockpiles are already low," he said in an interview after the forum. "We thought this was the year we might get some relief from that, and that may not happen. We're going to have highly volatile prices the rest of the summer."
Areas of Indiana, Illinois, eastern Iowa and Missouri have had less than half of normal rainfall in the past 30 days, the National Weather Service said. Parts of the Midwest may see some significant showers by the middle of next week, while the driest Midwest and Mississippi Delta areas may see little precipitation, Telvent DTN Inc. said Tuesday.
Fifty-six percent of the U.S. corn crop was in good-to-excellent condition as of June 24, down from 63 percent a week earlier and a 20-year low for this point in the season, according to the U.S. Department of Agriculture. Futures of the grain traded in Chicago touched a nine-month high earlier Wednesday.
Corn supplies in the United States, the world's biggest exporter, are declining at the fastest pace since 1996, according to USDA data.
While the USDA's prediction June 12 was for a 20 percent jump in U.S. output this year -- to a record 14.79 billion bushels -- the harvest is about two months away, and dry weather across the main growing region comes as plants begin to pollinate. That's the most vulnerable period in the growing cycle, so the next two weeks are crucial, wrote Dennis Gartman, author of the Suffolk, Va.-based Gartman Letter.
The persistent heat and dryness isn't expected to let up over the summer, when corn and other crops need sufficient moisture to grow, said the weather service's Mr. Rosencrans.
The drought that ran through 1987 and 1988 "will come up as one of the clearest analogues to this year," he said.
First Published June 28, 2012 12:00 am