Prospects for a major crisis among the nation's corn producers increased last week as fields across the heartland continued to wilt under persistent hot, dry conditions. Weather forecasts predict continued extreme heat and the absence of rain in much of the Corn Belt, and government agencies are dramatically adjusting corn yield projections downward.
Thirty percent of the nation's corn crop is in poor or very poor condition, according to the latest U.S. Drought Monitor report, up from 22 percent a week before. Fully half of the nation's grazing pastures are in poor or very poor condition, increasing from 28 percent in mid-May.
The combination of lower corn yields and dwindling hay supplies could cause price spikes across a wide array of consumer goods. Most of America's corn crop is used for livestock feed, according to the Agriculture Department, but starch, sweeteners, beverage and industrial alcohol, and cooking oil are also derived from corn. In 2011, the United States produced nearly 14 billion gallons of ethanol, largely from corn.
December contracts for corn increased 8 cents Friday to $7.40 per bushel, following a 4 percent increase the day before. It's the highest price in the past 11 months.
Rick Tolman, CEO of the National Corn Growers Association, told ClimateWire that the yawning disaster has come on quickly and undercut high expectations for this year's harvest.
"We came in with a near-record 14 [billion] to 15 billion bushels planted, and we anticipated harvesting an average of 166 bushels per acre -- the highest ever. Our current best estimate is 140 bushels per acre and a 12.5-billion-bushel crop. That's a significant decline. It's based on conditions now, but if it continues, we anticipate a 120-bushel national average."
Pain in the middle of the Corn Belt
The forecast for the coming week suggests drought conditions will intensify, further jeopardizing the nation's agricultural sector, especially corn, which requires just the right combination of sun and moisture during this time of year to pollinate and produce kernels. Tolman said the extreme heat and dry weather have been a double whammy for producers.
One or the other, he said, and farmers might have coped, but together they have been devastating.
The areas hardest hit, Tolman added, lie at the heart of the nation's Corn Belt: Indiana, Illinois, Missouri and Iowa. Some corn-growing areas of the upper Great Plains have seen improvement, as well as places in Minnesota. Corn-growing areas in western Kansas and Colorado where crops are irrigated have endured the heat wave, but 85 percent of corn grown in the United States is not irrigated, Tolman said.
According to agricultural meteorologists at AccuWeather.com, new and frequent heat waves and "stingy rainfall" in the western part of the Corn Belt are likely to continue through the middle of August.
Tolman said that while the focus has been on the drought's impact on prices, the financial toll on farmers shouldn't be overlooked. He says farmers will face a "tremendous" loss of income. Rising corn prices will benefit producers who avoid the impacts of the drought. But with nothing to sell, those high prices mean nothing for the growing number of farmers facing significant crop mortality.
In response to the widening drought, with nearly 80 percent of the contiguous United States experiencing abnormally dry conditions, USDA has declared a natural disaster in more than 1,000 counties in 26 states.
A trend not seen in 120 years
The agency also announced changes to disaster relief efforts for farmers and ranchers affected by the drought that aim to reduce by 40 percent the agency's processing time for disaster relief and cut the interest rate for emergency loans from 3.75 percent to 2.25 percent.
"Most farmers have to borrow money to plant their crops," Tolman said. "Some farmers will take out insurance payments. So they will have some coverage, but that will just result in increased premiums down the road. This drought is putting significant hurt on quite a number of farmers across the country."
The ongoing heat wave and lack of rain have compounded already existing drought conditions in many areas of the country, like Texas and the Southwest. Tolman says that while the Midwest avoided widespread drought last year, periods of torrential rain adversely affected yields. If it's not one type of anomaly, he said, it's another, and for corn producers in the Midwest, that means the losses are coming annually.
"We've had three years where corn yields have been below trend," Tolman said. "It's the first time in 120 years that we've had that. In the spring, we thought we had a really good year coming. We planted 96 million acres, the most since 1937. We've had high heat and no rain this year. The combination of the two is deadly."