Impact of Drought on Corn Belt Worse in Over 50 Years

The U.S. Department of Agriculture gave its assessment of the historic drought Friday, forecasting national corn production at 10.8 billion bushels, down 13% from 2011 and the lowest production since 2006. The report is the USDA's first official assessment of the impact of the drought that has hit the Corn Belt and is considered to be the worst since 1956.

Midwest states went into the planting season with soils at below-average moisture levels after an unusually warm and dry winter, and the record heat in July interfered with the pollination process of corn plants. The government report said corn prices, which already have reached record levels above $8 per bushel in the last month, could go to as high as $8.90 per bushel, well above $6.40 per bushel projected in July and $4.80 per bushel projected in April at planting time.

On the Chicago Board of Trade corn futures sold for $8.27 per bushel shortly after the report was issued, as traders already had factored lower production into their numbers. Based on conditions as of Aug. 1, yields are expected to average 123.4 bushels per acre, down 23.8 bushels from 2011. If realized, this will be the lowest average yield since 1995. Read more >>