USDA Slashes Corn Outlook - "Food Price Spike Dead Ahead"

A scorching drought across the Midwest will slash corn yields by much more than most analysts had expected, the government said in a report that reignited a record rally in grain prices. The U.S. Department of Agriculture said the crop will average just 146.0 bushels an acre, down 20 bushels from its June estimate.

As a result, the agency reduced its forecast for ending stocks by 37 percent from last month, partly offset by lower exports and less ethanol usage. The surprisingly deep cut to the yield outlook shocked traders, who had expected the USDA to take a more conservative approach to adjusting its outlook. The reduction in ending stocks was deeper than the forecast for a 32 percent cut. Read more >>

This from Zero Hedge:

Who knew the next black swan would be deep fried? The biggest piece of imminent food inflation news over the past months, coupled with what is shaping up to be another record hot summer (for the best tracking of real-time electricity consumption primarily for cooling news we recommend the following PJM RT tracker of power load), has been the collapse in the corn harvest due to the worst drought since 1988 as 56% of America is in drought conditions.

Today, the US just added some burning oil to the popcorn by cutting the corn-crop forecast by 12% to 13 billion bushels on expectations of a 13.5 billion harvest. Then again, who needs corn, when you can have cake? Read more >>