U.S. Corn Growers Farming in Hell, why this will hit your wallet hard

U.S. Corn Growers Farming in Hell, why this will hit your wallet hard.(BW).By Jeff Wilson.The worst U.S. drought since Ronald Reagan was president is withering the world’s largest corn crop, and the speed of the damage may spur the government to make a record cut in its July estimate for domestic inventories. Tumbling yields will combine with the greatest-ever global demand to leave U.S. stockpiles on Sept. 1, 2013, at 1.216 billion bushels (30.89 million metric tons), according to the average of 31 analyst estimates compiled by Bloomberg. That’s 35 percent below the U.S. Department of Agriculture’s June 12 forecast, implying the biggest reduction since at least 1973.
The USDA updates its harvest and inventory estimates July 11. Crops on July 1 were in the worst condition since 1988, and a Midwest heat wave last week set or tied 1,067 temperature records, government data show. 

Prices surged 37 percent in three weeks, and Rabobank International said June 28 that corn may rise 9.9 percent more by December to near a record $8 a bushel. 

The gain is threatening to boost food costs the United Nations says fell 15 percent from a record in February 2011 and feed prices for meat producers including Smithfield Foods Inc. (SFD) (SFD) “The drought is much worse than last year and approaching the 1988 disaster,” said John Cory, the chief executive officer of Rochester, Indiana-based grain processor Prairie Mills Products LLC. “There are crops that won’t make it. The dairy and livestock industries are going to get hit very hard. People are just beginning to realize the depth of the problem.”
Corn rallied 18 percent in the month through July 6 on the Chicago Board of Trade to $6.93, trailing only wheat among 24 commodities tracked by the Standard and Poor’s GSCI Spot Index, which rose 2 percent. About 53 percent of the Midwest, where farmers harvested 60 percent of last year’s U.S. crop, had moderate to extreme drought conditions as of July 3, the highest since the government-funded U.S. Drought Monitor in Lincoln, Nebraska, began tracking the data in 2000.
Fields are parched just as corn plants began to pollinate, a critical period for determining kernel development and final yields. About 48 percent of the crop in the U.S., the world’s largest grower and exporter, was in good or excellent condition as of July 1, the lowest for that date since 1988 and down from 77 percent on May 18, government data show. “The shrinking global economy is the elephant in the room that no one wants to discuss as long as U.S. crops are under siege,” said Dale Durcholz, the senior market analyst for Bloomington, Illinois-based AgriVisor LLC. “Corn demand at $5 is much more robust than when it costs $7.”
Corn tumbled into a bear market in September and kept dropping as farmers planted more crops. Robert Manly, the chief financial officer at Smithfield Foods, the largest U.S. pork producer, told analysts on a June 14 conference call (SFD) that hog- raising costs would “begin to decline starting in the fall.” Corn has surged 41 percent since then, reaching a nine-month high today. U.S. corn production may drop to 11 billion bushels, the smallest crop in seven years, because the hot, dry weather killed the pollen and rains now may be too late to reverse the damage, according to Cory, the Indiana mill owner and a former investment banker. Prices may reach $9 before demand slows, he said. The drought may spark a rebound in global food prices this month through October, halting a slide that sent costs in June to the lowest level in 21 months, Abdolreza Abbassian, an economist in Rome at the United Nations’ Food and Agriculture Organization, said July 5. “Corn is key because of its widespread use as a base ingredient in so many foods and for its use in feed for livestock,” said Stanley Crouch, who helps oversee $2 billion of assets as chief investment officer at New York-based Aegis Capital Corp. “We are at the tipping point.”
In May, retail prices of boneless hams, ground beef and cheese in the U.S. were close to all-time highs set earlier this year, while chicken breast jumped more than 12 percent during the first five months of the year, government data show.
“When people look at rising prices for hamburger, butter, eggs and other protein sources from higher corn costs, that’s when more money ends up in the food basket,” said Minneapolis- based Michael Swanson, a senior agricultural economist at Wells Fargo and Co., the biggest U.S. farm lender. “We were hoping for a break, and we aren’t going to get it.”Hmmmm..........Higher food prices just in time for the elections.....CHANGE, preparing  to UNINSTALLING OBAMA.... █████████████▒▒▒▒▒▒ 47.5% .Read the full story here.U.S. Drought monitor here.