Good Dirt Gone Dry Wilting Corn Crop as Food Costs Rally.
Tom Flora walked into one of his corn fields in Delphi, Indiana, last week to survey land that until last month he expected would yield a bigger-than-average harvest. Eight rows in, he declared the crop a total loss.
“I’ve never seen this,” 63-year-old Flora said as he fingered the wilted brown leaves on a four-foot corn stalk that was half the normal height for this time of year and had cobs almost devoid of kernels. “This is good dirt here, but not this year. It’s too dry. I doubt this will produce anything.” The worst Midwest drought since 1988 is baking farms from Arkansas to Ohio and threatening corn output that the U.S. said last week will be the second-largest ever. The price of the grain used in food for people and livestock is surging at a time when retail-meat costs already are near record highs. Global food prices are poised to rebound from a 21-month low in June because of weaker-than-expected supply in the U.S., the world’s largest corn exporter, the United Nations said July 5.
With forecasters including AccuWeather Inc. predicting worsening conditions in the next month, corn traded in Chicago surged by $2.665 a bushel since mid-June, or 53 percent. The rally is adding to pressure on the livestock industry because cattle feedlots are already losing as much as $200 an animal. Sanderson Farms Inc. (SAFM), the third-largest U.S. poultry producer, said every 10-cent corn increase boosts costs by $2.21 million.
Corn advanced 22 percent this month to $7.7225 on the Chicago Board of Trade, the most among 24 commodities in the Standard & Poor’s GSCI Spot Index, which rose 5.2 percent. The MSCI All-Country World Index of equities fell 0.9 percent and the U.S. Dollar Index gained 1.8 percent. Treasuries returned 0.9 percent, a Bank of America Corp. index shows.