The lingering drought in the Midwest did not hurt this year’s corn crop as much as feared.
A report issued by the U.S. Department of Agriculture (USDA) on Wednesday forecast this year’s corn harvest at 10.727 billion bushels. That was down from an earlier forecast of 10.779 billion bushels, but well above the 10.420 billion bushels that analysts had predicted, Bloomberg noted.
The better-than-expected harvest estimate sent corn prices tumbling to their lowest levels in seven weeks. Corn prices had jumped 54% since June as the drought continued to roast corn belt states.
Corn hit a record high of $8.49 a bushel in August. After the USDA report, corn futures for December delivery fell to $7.6675, their lowest price since July.
According to the government, this year’s harvest will still be 13% below 2011’s 12.358 billion-bushel yield and the lowest harvest in six years. With less corn available, feed prices for livestock producers like Tyson Foods (NYSE:TSN) and Smithfield Foods (NYSE:SFD) have risen. Low corn supplies are also putting the squeeze on ethanol refiners, including Valero (NYSE:VLO) and Archer Daniels Midland (NYSE:ADM).
With about 15% of the crop harvested so far, corn fields were in their worst condition since 1988, the government noted. Experts say this year’s drought has been the most severe since 1936, putting 52% of U.S. cornfields in at least poor condition.