Cows graze in a drought-damaged pasture as temperatures climbed to over 100 Fahrenheit (37.7 Celsius) in Jasper, Indiana, July 24, 2012. Credit: Reuters/ John Sommers II
(Reuters) - Welcome rains provided some relief to heat-stressed cities and worried farmers in the U.S. Midwest on Tuesday, but reports of failed crops, wildfires and other fallout from the worst U.S. drought in more than 50 years tempered any optimism.
The first soaking rains for weeks in parts of the northern Midwest sent U.S. corn and soybean prices sharply lower. But those prices still hover around record highs with weather forecasts for August indicating more heat is on the way.
More rain is forecast for the next 10 days across northern Midwest crop areas, while the southern half will remain dry, forecasters said. Forecasts also called for the central and southern Midwest to remain hot the next two weeks.
"One set of rainstorms does not put us out of danger in a drought," said agriculture economist Jim Robb. "We have already set huge declines in corn and soybean yields, even if it rains every day for the balance of the growing season."
At the Chicago Board of Trade, corn for September delivery closed 24 cents lower at $7.90 a bushel, down 3 percent, and August soybeans closed 49-1/4 cents lower at $16.49-1/4, down 2.9 percent. September delivery wheat closed 34 cents lower at $8.78-3/4 a bushel, down 3.7 percent on the day.
Only a quarter of the U.S. corn crop is now rated in good to excellent condition, according to the U.S. Agriculture Department. That is the worst condition at this key stage of the growing season since the 1988 drought which caused more than $40 billion worth of damage and created havoc in domestic and world food markets.
Crop scouts in Indiana and Ohio this week found fields of short, wilted corn stalks with no ears of grain. In a normal year, corn plants would be lush, green and six feet tall.
"This ground where they were looking, on a good year, is 200 bushels-plus," central Indiana farmer Stewart Major said on Tuesday, referring to his withered corn field. "It started losing yield around the first of July."
Severe damage has also been reported in Iowa and Illinois, which alone produce about a third of U.S. corn and soybeans. The knock-on effect from the losses is already being seen around the world since the United States is the world's single largest exporter of corn, soybeans and wheat.
Ken Ash, head of trade and agriculture at the Organization of Economic Cooperation and Development in Paris, said that the United States should consider lowering its mandated targets for using corn to produce ethanol if drought reports worsen.
Last year, 40 percent of the U.S. corn crop was used to produce the fuel. Corn is also the basic livestock feed in many nations and has hundreds of other uses.
"At the moment, with what's on the table, we're calm but watching what happens," Ash said. "What's really important is whether it gets worse."
Markets now expect the smallest U.S. corn harvest in 10 years at 11.4 billion bushels, according to grain analysts polled by Reuters on Tuesday. That was down from initial forecasts for production over 14 billion bushels.
"Heat and dryness aborted kernels and population was really thin," Kyle Tapley, an agricultural meteorologist at MDA EarthSat, said after inspecting Ohio corn fields this week.
Soybeans mature later than corn, and the U.S. soy crop may escape the worst of the drought providing forecasted rains arrive in time. Analysts expect U.S. soy harvest of 2.9 billion bushels, which would be down just 5 percent from last year but the smallest in five years, according to the Reuters poll.
The USDA on Monday dropped its rating of the soybean crop for the fourth straight week, with 31 percent of the crop rated good to excellent. The biggest drops in condition ratings were in Illinois, Iowa and Kansas.
FIRES, HEAT STRESS CONTINUE
Weeks of triple-digit heat and prolonged dryness continue to take a toll in the Midwest and Plains states, one of the largest food producing regions of the world. Nebraska, Wisconsin, Indiana and other states have issued drought emergencies.
Missouri Governor Jay Nixon declared a state of emergency due to the drought and severe heat which has so far been blamed for the deaths of 25 people in the state.
"Our farmers are suffering tremendous losses in crops and livestock, and we're seeing more heat-related deaths and emergency room visits, particularly among seniors," he said.
In north-central Nebraska, a wildfire had burned more than 58,000 acres of forest, grassland and farmland by Tuesday with at least 10 homes and other structures destroyed. A lightning strike started the Fairfield Creek blaze five days ago, the state's emergency management agency said, and fire crews were battling two new blazes on Tuesday.
The U.S. Agriculture Department has designated 1,297 counties across 29 states as disaster areas due to the drought, making the areas eligible for low-interest emergency loans.
Forecasters on Tuesday said the outlook for the northern Midwest over the next 10 days was milder and wetter than for the southern parts of the region.
"There's a better chance of rain from Minnesota into Michigan and into the eastern Ohio River Valley," Jason Nicholls, meteorologist for AccuWeather, said of the outlook for the next 10 days. But it will remain too dry in an area extending from Iowa to central Illinois and back into Missouri and Kansas, he added.
Temperatures will remain in the 80s to 90s degrees Fahrenheit (26 to 35 degrees Celsius) for the next two days, followed by a cooler trend, only to heat up again next week into the 90s to triple digits, Nicholls predicted.
- Reuters
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