U.S. corn production estimates have dropped another 6.9 percent since the U.S. Department of Agriculture's most recent predictions, to 12.077 billion bushels — the smallest in five years — due to the worst drought the Midwest has seen since 1956, according to analysts. Estimated yield has lowered another 6 percent, to 137.2 bushels per acre, down from the USDA's forecast of 146 bushels.
The area to be harvested is also dropping. The USDA revised its numbers down to 88.9 million acres from a previous 89.1 million acres in its July crop report, 92.2 percent of the total planted area. But analysts say that's an optimistic estimate. "It's changing by the hour and by the day," said Charlie Sernatinger, analyst for ABN Amro. "The yield is lower today than it was yesterday. Yesterday's estimate was lower than Friday and we have to drop the harvested acreage, too."
Spot contract September corn rose to a high of $7.96-1/2 at the Chicago Board of Trade on July 17 — a 13-month peak and just short of the record high of $7.99-3/4 set in the summer of 2011. New-crop December corn ended 0.2 percent lower at $7.71-1/4. Corn prices have risen 45 percent this summer and are at 13-month highs.
The dry weather is likely to continue through August, according to experts, exacerbating the current problem. Fifty-five percent of the U.S. is in the drought, which has come just when corn plants should be pollinating. "We're moving from a crisis to a horror story," said Purdue University agronomist Tony Vyn. "I see an increasing number of fields that will produce zero grain." The soonest rain is expected in the Midwest is around July 25, said Jason Nicholls, meteorologist for AccuWeather. The latest forecast calls for rains of 0.2 to 0.7 inch around the region.
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