2014 Drought:Impact on America's Most Important Crop

Palmer Z Index
Palmer Z Index

This summer is going to be one of the hottest and dryest on record, if the spring is any indication. The drought that has swept most of the country is being compared to the Dust Bowl. The very cause of the depression to many historians. So what will this drought mean for us? What can we expect to see in the months to come? Long term implications?

Corn=Life

Corn is a very important crop that is already feeling the effects of the drought. Price per bushel has sky-rocketed and whispers of shortages are already being heard. America planted over 96 million acres of corn this year and over half are in poor condition. With the highest amount of corn planted since the `930's and only 23% at excellent conditions, corn has been one of the hardest hit crops this year. Although all have suffered in yeild, corn is special because it does so much and feeds so many. The shortage could effect many venues and will effect all walks of life.

Cows in brown fields just ooking for a little shade in 100 degree heat wave
Cows in brown fields just ooking for a little shade in 100 degree heat wave

Beef, may not be for dinner much longer

Livestock sector has been hit exceptionally hard with wheat and corn prices at records high. Grazing fields are scorched and dead, so the price of feeding animals is becoming too much. Some farmers are choosing to "liquidate" herds to lower costs. This will mean an over-supply of meat for a while which will drive down prices, however 2013 will have a reduced supply and prices will show that. The USDA is estimating a 5% increase, but I can imagine that is a rather small estimate. While prices are low, it may be a good time to stock up on meat. Dairy prices will also be effected.

To Burn, Or not to Burn?

Around 40% of this countries corn is given to ethanol production plants to make a cleaner bio fuel. The Renewable Fuel Standard was enacted in 2005 requiring 13.2 billion gallons of corn starch derived bio-fuel in 2012. Though many would argue, with over 35% of the corn going to feed livestock, some believe that less should be burned in order to make sure there is enough food for everyone. The high demand for corn for ethanol has raised corn bushel prices from around 2.15 in 2006, to over 8 dollars today.

Stunted corn in Iowa
Stunted corn in Iowa

The Big Picture

The big picture is the world. Americas supply in corn, soybean and other food staples have an immense impact on the rest of the world. America feed many countries and the poorest people will feel the biggest impact of short supply and higher prices. Those who were already having trouble feeding their families. Yes the U.S. may see a 5% increase which will cause some social unrest and hardship. Many countries may starve. Violent riots in many countries broke out after rice, corn and wheat prices soared, both in 2007 and 2010. We are not the only country feeling the heat, Russia is reported to have 30% less to offer this year as well. The implications could be severe and this may be a long winter.

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