Punishing drought in Midwest shows no sign of abating
The soonest rain is expected in the Midwest is the middle of next week, said Jason Nicholls, meteorologist for AccuWeather.
The new forecast calls for rains of 0.2 to 0.7 inch (5 mm to 18 mm) around the region, up from earlier outlooks of 0.1 to 0.6 inch.
The dry weather and intense heat likely will continue through August, further damaging the corn crop, AccuWeather said.
Corn prices are at 13-month highs and have surged 45 percent this summer, with analysts expecting the lingering drought to result in the smallest U.S. corn crop in five years.
As the worst drought since the Eisenhower administration begins to expand to the northern and western Midwest, areas that had previously been spared, analysts are slashing corn yield estimates by the hour.
"We need soaking rains now. We need two-to-three-inches and that's not in the forecast," AgResource Co analyst Dan Basse said.
Effect on Food Prices
In April concern mounted that near-record spring corn plantings would sharply increase supply and push corn prices below $5 per bushel.
Now, because of the drought, corn prices are flirting with $8 per bushel, and that could boost food prices.
With much of the Midwest pasture laid waste by the drought and ranchers facing climbing feed costs, many ranchers have begun liquidating their herds, which could translate into higher prices for meat next year.
"Based on my conversations with producers, I would say 75 percent of the corn crop in the heart of the drought is beyond help," said grains analyst Mike Zuzolo, president of Global Commodity Analytics & Consulting in Lafayette, Indiana.
Weather problems were also reported in Eastern Europe and Asia, mirroring drought that dented Argentina and Brazil's last harvest.
Black Sea grain producer Kazakhstan was preparing for a below-average crop this year due to an "alarming" drought in the country's main growing regions.
The United Nations food agency said earlier this month that the U.S. drought was expected to see global food prices snap three months of declines in its July figures.
The drought is even harming equipment makers. Shares of Deere & Co, the world's largest maker of tractors and combines, fell on Tuesday after a JPMorgan analyst said the U.S. drought was likely to harm sales in 2013.