US Drought Intensifies; Corn Prices Fall on Call to End Ethanol Mandate

The past seven days have seen drought conditions intensify in the states of Nebraska, Kansas, Missouri, Oklahoma, and Arkansas, according to today’s report from the US Drought Monitor:

Pretty much all of Kansas, Missouri and Nebraska are now in severe drought, and it expanded through much of Oklahoma. It’s hard to believe that it’s getting worse, but it is, even with some rain in the region.

The total area of the US affected by moderate drought shrunk slightly over the last week, leaving about 53% of the country in a state of moderate drought or worse. And the forecast calls for more of the same:

Drought will continue over much of the country through October. Some improvement is anticipated over the Southwest and up into Utah and Colorado due to a strong monsoon season, and improvements over the Southeast are expected too. Drought will persist over much of the rest of the current drought regions with further development over the Dakotas and into Montana as well as in portions of Texas.

The country continues to suffer from the worst drought conditions since 1956. The US Department of Agriculture will release its next forecast on crop damage on August 10th.

Also today, Bloomberg reports that some US lawmakers are calling for an end to mandated ethanol blending with gasoline, which has caused corn prices to moderate somewhat. Corn and soybean prices have dropped as well.

Paul Ausick