DES MOINES, Iowa (AP/KMOX) — Corn and soybean prices surged Monday after the latest government report showed a widespread drought in the middle of the country is hurting this year’s crop.
The U.S. Department of Agriculture report said 30 percent of the corn in the 18 states that produce most of the nation’s crop is now considered in poor or very poor condition. A week ago, it was 22 percent.
Indiana and Illinois have been particularly hard hit. The USDA said 61 percent of Indiana’s corn is now rated poor or very poor, compared to 50 percent last week. In Illinois, 48 percent of the corn is rated as poor or very poor, compared to 33 percent a week ago.
Nationwide, the amount of corn rated good to excellent also is dropping, to 40 percent this week from 48 percent a week ago.
The soybean crop is stressed too and worries that it will suffer drove prices to a new record on Monday. In morning trade, prices peaked at $16.79 per bushel before settling back down to close at $16.65, up 45 cents.
The USDA reported that 27 percent of soybeans were in poor or very poor condition in the 18 states were most are grown. It was 22 percent a week earlier.
Only 40 percent of the soybean crop was in good or excellent condition, down from 45 percent a week earlier.
Corn is pollinating in many areas of the farm belt, and extreme heat during pollination can hurt formation of the ears and kernels, cutting into the amount of corn farmers will harvest.
As the price of corn goes up, that means a higher costs for beef producers who use it to feed their livestock and it will also increase the cost of ethanol.
Food price inflation takes time to feed into the grocery counter, but dairy, meat and poultry, all dependent on corn for feeding animals – generally feel the brunt first.
(TM and © Copyright 2012 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2012 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)