Corn hits record high of $8.166 per bushel

Corn hits record high of $8.166 per bushel

Midwest drought expected to continue through summer, according to weather reports

Corn for September delivery rose nearly 3 percent, to a record high of $8.166 per bushel, on July 19 as the Midwest drought continues to affect crop prices. The weather has contributed to 50 percent increases in corn prices in the last five weeks, according to reports.

Corn for December delivery, the most active contract, hit $7.990 per bushel on July 19, just short of the record $7.998 reached in June 2011. “We went into this year having planted more acres than we had planted in many years, expecting to raise a bumper crops,” said Pam Johnson, an Iowa corn farmer. “The planting conditions were great, and our corn came out picket-fence perfect. But now we have no idea how many bushels we’ll be able to harvest this fall.”

Analysts said that while forecasts for continued dry weather are expected to sustain the increases, corn prices could be vulnerable to any move by the government to lower the amount of corn-based ethanol blenders are required to mix with gasoline. U.S. Agriculture Secretary Tom Vilsack has said that a revision of the ethanol mandate won’t happen. “The only thing that can stop this rally is if they pull the mandate,” said grains analyst Mark Kinoff, president of Ceres Hedge. “In two weeks, if corn prices are $2 higher, they might change their tune.”

A weather report from the Drought Monitor shows the drought is expanding. Half of the Midwest is currently in severe to exceptional drought, up from one-third of the region in the second week of July. Ball State University meteorology professor David Call said that barring a major weather pattern change in August, this summer is likely to be the hottest and driest since the Dust Bowl era of the 1930s. “Like the 1930s droughts, this year’s drought is unusual because it is affecting such a large portion of the country, and it is accompanied by record-setting heat,” said Call.