Wed, Jul 18, 2012 - Page 7 News List

US drought spreads northwest

DRY SPELL:Figures show 55% of the contiguous US was under moderate to extreme drought — the largest land area affected by a drought since 1956

Reuters, CHICAGO

Marion Kujawa feeds corn to his cattle on Monday near Ashley, Illinois. Many farmers in the Midwest have been selling off their cattle because of the lack or the high prices of hay and corn in the drought-stricken region.

Photo: AFP

An expanding US drought, now deemed the worst since 1956, dealt another blow to the corn crop, with conditions deteriorating for a second straight week in the world’s top exporter of the grain, US government data showed on Monday.

There were signs that the drought, which has been centered in the Midwest, was expanding north and west, putting more crops at risk — including in states like Nebraska, where large tracts of cropland are irrigated by groundwater and rivers.

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

In a report titled National Drought Overview, NOAA said that moderate to extreme drought had spread across much of the Midwest and Central to Northern Plains, with pockets of exceptional drought in the High Plains of Colorado.

The drought, previously considered to be the worst since 1988, has been wreaking havoc on developing crops in the US farm belt.

The amount of the corn crop rated by the US Department of Agriculture (USDA) to be in the good-to-excellent category fell 9 percentage points to 31 percent, well exceeding the 5-point drop expected by traders polled by Reuters on Monday morning.

The drought also pummeled the soybean crop, which was rated 34 percent good-to-excellent, down 6 percentage points from the previous week and 1 point below estimates for 35 percent.

After one of the mildest winters on record sparked a record pace in planting and promised a bumper harvest, a sudden turn to dry weather in the Midwest has decimated crops.

New-crop December corn futures on the Chicago Board of Trade have soared 54 percent since the middle of last month, reaching a contract high of US$7.78 on Monday.

The surge in prices would cut into margins for meat companies like Smithfield Foods and Tyson Foods and ethanol producers, while raising the prospects for higher beef and pork prices in the US next year as ranchers cull their herds because of high feed costs.

“The drought continues to take a significant bite out of yield potential,” said Dan Basse, president and analyst for AgResource Co.

In a report last week, the USDA cut its corn yield estimate by an unprecedented 20 bushels to 146 bushels per acre, igniting concerns that this year’s crop could mirror production in 1988, when a similar drought decimated the crops.

“I suspect we’re getting very close to something in the 132 to 133 yield range, and it’s still falling,” Basse said.

“As the crop gets worse, there’s an historical precedent for increased abandonment. If you talk to farmers, they’d tell you that there’s a fair amount of fields being zeroed out by crop adjusters,” Basse said, referring to farmers forgoing their crops to collect crop insurance.

The top two corn producing states in the country, Iowa and Illinois, showed huge declines in crop prospects.

Corn in Iowa fell from 46 percent good-to-excellent last week to 36 percent this week. In Illinois, the crop plunged to 11 percent from 19 percent good-to-excellent.

The crop in Missouri, worst hit by the drought, fell to 7 percent from 12 percent, while Kentucky’s crop improved slightly to 6 percent from 5 percent.

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