Last summer’s searing drought took a significant toll on corn crops in much of the Midwest. Until recently, farmers expected to make a big comeback with a record U.S. yield this year, but that prospect has dried up in recent weeks. Record-high temperatures and dry skies are burning off hopes for a bumper crop and heating up the possibilities for another poor season, as The New York Times reported.
In fact, the drought has been spreading to more of the Midwest this summer, creating conditions that may come to resemble the 1988 drought that cost the agriculture industry $78 billion, National Weather Service drought specialist Mathew Rosencrans told Bloomberg late last month. Mid-June predictions for a 20% jump over last year’s corn crop fell rapidly in the second half of the month, and by June 24 only 56% of the U.S. corn crop was in good-to-excellent condition, compared with 63% the week before, according to the Agriculture Department. The U.S., which exports more corn than any other country on the globe, is seeing supplies dwindle at the fastest rate in 16 years, according to the USDA.
Shrinking supplies and predictions for another spare season are starting to hit prices for the commodity. Prices saw their biggest three-day gain in two years in the last week of June; prices for December corn futures – the first crop that will reflect this summer’s growing season – rose 14% last week, reflecting concerns about the upcoming pollination season, a critical time in the life of the crop, according to a Reuters report.
“Every day that passes, more corn will be abandoned. But even if it starts raining now, there will not be that bumper crop of corn everyone talked about,” said Illinois farmer Don Duvall in the Times story.
Global food prices, which fell for the third consecutive month in June, are likely to reverse that trend soon amid the ongoing U.S. drought, the U.N. Food and Agriculture Organization said on Thursday.
Corn goes into so many other products, from cattle and chicken feed to ethanol, that shrinking crops have a significant ripple effect. When other factors send beef and pork prices higher, consumers and restaurants can switch to poultry dishes to keep costs down; when corn prices rise, the prices of other crops and livestock follow, making it much tougher to contain costs and keep from raising menu prices.
“Getting a big corn crop is important for everyone,” said Texas A&M agricultural economist David Anderson told The Washington Post, in one of several recent stories pointing out the potential for food inflation to resume in the coming months.
“At this time of year, when you look down in a place like Indiana or Illinois, you should see just lush green fields. I saw bare soil. I just thought to myself, the market has no idea what’s coming,” Kansas farmer Jay Armstrong told the Post.
Will your restaurant have to raise prices if costs go up this year? Tell us in the comments.