US cuts corn, soybean outlook as drought burns on

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U.S. corn growers could have their worst crop in a generation as the harshest drought in decades takes its toll, the government reported Friday as it forecast the lowest average yield in 17 years.

The U.S. is the world’s biggest producer of corn, soybeans and wheat, and the United Nations has warned of higher global food prices as the dry spell withers farms across the Midwest.

The Agriculture Department slashed the U.S. projected corn production to 10.8 billion bushels, the lowest production since 2006. That’s down 17 percent from its forecast last month of close to 13 billion bushels.

Soybean production was forecast at 2.69 billion bushels, a 12 percent decline from last year.

Friday’s revised outlook comes months after corn farmers expected this to be a record year when they planted, sowing the most acres since 1937.

The USDA earlier this week said exactly half of the nation’s corn crop was rated poor to very poor. Some 39 percent of soybeans now fall under those two categories.

The nation’s rangeland and pastures are faring even worse, with roughly three-fifths rated to be in poor to very poor shape — the largest area affected in 18 years.

On Thursday, the latest weekly U.S. Drought Monitor map showed that the drought conditions in Midwest states continue to worsen. The expanse still gripped by extreme or exceptional drought — the two worst classifications — rose to 24.14 percent, up nearly 2 percentage points from the previous week.

That’s because key farm states didn’t get as much benefit from rains as elsewhere after temperatures in July broke a record high set during the Dust Bowl of the 1930s. The National Oceanic and Atmospheric Administration reported Wednesday that this year’s first seven months were the warmest on record for the nation.

Such dry conditions have factored into a sharp rise in global food prices after three months of decline, the U.N.’s Rome-based Food and Agriculture Organization said in its monthly price report Thursday. The FAO said its overall food price index climbed 6 percentage points in July, although it was well below the peak reached in February 2011.

The FAO’s index, considered a global benchmark used to track market volatility and price trends, measures the monthly price changes for a basket of food items including cereals, oils and fats, meat, dairy products and sugar.

Spikes in the prices of staple foods have led to riots in some countries in recent years.

The surging prices are expected to be felt across the international marketplace, hurting poor food-importing countries, said a study by British charity Oxfam issued on the eve of the U.N. report.