The drought conditions in the US are continuing to create havoc for crops. Corn in particular has been hit hard.
Reuters: - "There are a lot of people thinking of chopping their corn up and feeding it to cows," said University of Missouri Professor of Plant Sciences William Wiebold.
The condition of the U.S. corn crop has deteriorated quickly after a record-fast planting buoyed hopes of a bumper crop this fall in the world's largest exporter of grains.
Crop ratings have fallen to their lowest level in 24 years, with the U.S. Agriculture Department's most recent estimate pegging the crop as just 40 percent good to excellent.
The government sharply reduced its expectations for the crop on Wednesday, cutting its yield forecast by 20 bushels per acre, or 12 percent in its monthly crop report. If realized, the yield estimate of 146 bushels per acre would be the lowest since 2003.
|Percent of corn crops in "good" or "excellent" conditions (source: USDA)|
It is important to note that elevated corn prices will impact numerous other agricultural and even non-agricultural commodities. Food inflation could be a serious issue.
The Kansas City Star: - A punishing Midwest drought may lead to food inflation as the cost of corn soars and the price of a key feedstock for ranchers rises. Experts warn it could mean higher costs for everything from a hamburger to a gallon of milk in the months ahead.And as difficult as it may be for the US consumer, this will cause serious problems in some developing nations where food costs are a much larger proportion of household income. This is particularly problematic because the US produces 40% of the global corn crop.