Aug. 6 (Bloomberg) -- The condition of U.S. corn and soybean crops deteriorated to the worst since 1988 as the country’s most widespread drought in 56 years caused damage to plants across the Midwest.
About 39 percent of soybeans were rated poor to very poor as of yesterday, more than the 37 percent of a week earlier, the U.S. Department of Agriculture said today in a report on its website. For corn, 50 percent got the lowest ratings, up from 48 percent a week earlier.
Corn futures that have surged 59 percent since mid-June, and soybeans that have jumped 21 percent may spur higher food costs, according to the United Nations. Tyson Foods Inc., the largest U.S. meat processor, said today its profit will be lower after the company was forced to pay more for grain to feed animals. Corn conditions declined in Illinois and Iowa, the two biggest growers in the U.S., the world’s top shipper.
“Iowa saw more deterioration, and Illinois more deterioration,” Louise Gartner, the owner of Spectrum Commodities in Beavercreek, Ohio, said by telephone. The decline in ratings “is pretty dramatic,” she said.
About 55 percent of the contiguous U.S. was in a moderate to extreme drought at the end of June, the most since 1956, according to the National Climatic Data Center.
The worst of the dry weather occurred when corn plants were going through the critical pollination stage last month. Soybeans, which normally are planted later in the Midwest, are just now entering reproductive stages, so they have more time to grow. Without rain, conditions could worsen, Pfitzenmaier said.
Soybeans fell 2.7 percent to $15.8425 a bushel today on the Chicago Board of Trade, after surging 15 percent last month and touching a record $16.915 on July 23. Corn futures declined 0.3 percent to $8.05 a bushel. The price gained 27 percent last month, touching an all-time high of $8.205 on July 31.
Prices dropped today after some parts of the Midwest got rains over the weekend.
“There were some areas that got rain, but it was later in the weekend, so I don’t think it was picked up on this report,” Tomm Pfitzenmaier, a partner at Summit Commodity Brokerage in Des Moines, Iowa, said by telephone. “We’re getting down the road where what happens with corn doesn’t make much difference, but we’re starting to” worry about the soybeans, he said.
A drought in 1988 led to a 31 percent drop in corn production from a year earlier and a 20 percent decline for soybeans, USDA data show. Corn output will fall 13 percent this year and the soybean harvest will shrink by 11 percent because of the hot, dry weather, Doane Advisory Services Co. forecast last week.
Twenty-three percent of U.S. corn was rated good or excellent as of Aug. 5, down from 24 percent a week earlier, marking the ninth straight weekly decline, the government said. That’s the longest slump since at least 1986, USDA data show. Soybeans ratings were unchanged at 29 percent good or excellent, the first time conditions haven’t declined since June 1.
The government’s crop-conditions report showed 63 percent of spring wheat, a high-protein variety used to make bread and pasta, was rated good or excellent, unchanged from a week earlier. The crop was 47 percent harvested, compared with 4 percent at the same time a year earlier, the USDA said. The average for the previous five years was 12 percent.
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