|From the NOAA|
The United States is now experiencing its most widespread drought since 1956, according to reports from Monday. The National Oceanic and Atmospheric Administration (NOAA) stated, "Based on the Palmer Drought Index, severe to extreme drought affected about 33 percent of the contiguous United States as of the end of June 2012, an increase of about 10 percent from last month," and went on to say that, "about 55 percent of the contiguous U.S. fell in the moderate to extreme drought categories (based on the Palmer Drought Index) at the end of June."
The Midwest, the region producing the highest percentage of the country's staple crops (corn, soybeans, wheat) has been especially hard hit, and this week the USDA reported that 38 percent of the US corn crop was in poor or very poor condition (this figure was reported at 30 percent during the previous week). The soybean crop rating was cut to 34 percent good-to-excellent, down from 42 percent the previous week (the soybean crop goes through through flowering and pod-setting in August, and could recover if there is enough rainfall in the coming weeks). Corn production figures have been cut, prices are up, and there are fears of global food shortages on the horizon. From the USDA report:
Persistent and extreme June dryness across the central and eastern Corn Belt and extreme late June and early July heat from the central Plains to the Ohio River Valley have substantially lowered yield prospects across most of the major growing regions. Harvested area is also reduced slightly based on the June 29 Acreage report.
Reduced supplies and higher prices are expected to sharply lower 2012/13 corn usage with the biggest reduction for feed and residual disappearance, projected down 650 million bushels. Food, seed, and industrial use is also projected lower, down 105 million bushels, mostly reflecting a 100-million-bushel reduction in corn used to produce ethanol. Exports are projected 300 million bushels lower as tight supplies, higher prices, and strong competition from South American exporters limit U.S. shipments.
A 52-million-bushel increase in beginning stocks and a 15- million-bushel increase in imports offset only a small portion of the expected reduction in this year’s crop. Ending stocks for 2012/13 are projected at 1.2 billion bushels, down 698 million from last month’s projection. The season average 2012/13 farm price for corn is projected at $5.40 to $6.40 per bushel, up sharply from $4.20 to $5.00 per bushel in June.