With a blistering heat wave continuing in much of the in the Midwest, the prospects for this season's corn crop have further diminished.
The latest prediction from the U.S. Department of Agriculture is that nationwide, corn farmers will get a yield of 146 bushels per acre this season. That's 20 bushels fewer per acre — a 12% drop — than the government agency forecast just last month.
The revised forecast caused a momentary spike in the price of corn futures for September delivery on the Chicago Board of Trade. The price Wednesday morning shot up about 30 cents a bushel to $7.49.
In mid-June, when prospects for the crop were not so dire, the price of corn futures was about $5.10 a bushel.
After the initial spike Wednesday, anxiety eased and by the close of trading the price of corn futures was down 14 cents at $7.04 a bushel.
"The [USDA] report didn't reveal anything the market hadn't already anticipated," said Don Roose, an analyst with U.S. Commodities.
Nathan Fields, an analyst at the National Corn Growers Assn., said that despite the new forecast and drought conditions, a large amount of corn will be available. "The news is not fantastic, but there is a lot of corn that has been produced this year," Fields said.
Corn is a key component in a panoply of consumer goods — including meat, vitamins, textiles and anything made with corn syrup — and other types of products such as ethanol fuel. But rising prices have reduced demand for the plant.
"I think it's simple supply and demand," said analyst Jason Roose, also of U.S. Commodities. "When prices go up people use less."
The decrease in the corn supply for feed could cause pig and beef farmers to slaughter more animals, said Dale Durchholz, an analyst at AgriVisor.
That could lead to higher meat prices in 12 to 18 months.