With 78 percent of the contiguous U.S. in drought conditions — including 24 percent in “exceptional” drought — the U.S. corn crop has taken a major hit. In a report today, the U.S. Department of Agriculture cut its estimates for this year’s corn yield to 10.7 billlion bushels — or nearly 17 percent below July estimates.
That sent corn futures up 3 percent to $8.43 a bushel, a record peak. As the drought has worsened, grain prices have shot up by between 25 and 50 percent since June. The Financial Times reports:
Politicians are increasingly alarmed by the current food supply situation. José Graziano da Silva, secretary-general of the UN’s Food and Agriculture Organisation, wrote in an opinion piece in Friday’s Financial Times that the situation was “precarious”.
“While the current situation is precarious and could deteriorate further if unfavourable weather conditions persist, it is not a crisis yet,” he said. But he added that “risks are high and the wrong responses to the current situation could create [a new crisis]”.
According to the National Oceanic and Atmospheric Administration, July was the hottest month ever recorded in the U.S., and the 12-month period from July of 2011 to June of 2012 was the hottest on record. So far this year, the U.S. has broken or tied 27,042 high temperature records — more than all of 2011.
Experts warn that the drought could last well into October for many ares of the country.