Corn has surged 41 percent since 14th of June

U.S. corn production may drop to 11 billion bushels, the smallest crop in seven years, because the hot, dry weather killed the pollen and rains now may be too late to reverse the damage, according to Cory, the Indiana mill owner and a former investment banker. Prices may reach $9 before demand slows, he said.

Based on current soil moisture and June temperatures, the drought is probably the worst since 1988, said Joel Widenor, a vice president at the Commodity Weather Group in Bethesda, Maryland. The private forecaster said July 5 that corn output this year will be 13.52 billion bushels, and that hot, dry weather in the next two weeks may reduce yields further.
The drought may spark a rebound in global food prices this month through October, halting a slide that sent costs in June to the lowest level in 21 months, Abdolreza Abbassian, an economist in Rome at the United Nations’ Food & Agriculture Organization, said July 5.

Base Ingredient

“Corn is key because of its widespread use as a base ingredient in so many foods and for its use in feed for livestock,” said Stanley Crouch, who helps oversee $2 billion of assets as chief investment officer at New York-based Aegis Capital Corp. “We are at the tipping point.”

In May, retail prices of boneless hams, ground beef and cheese in the U.S. were close to all-time highs set earlier this year, while chicken breast jumped more than 12 percent during the first five months of the year, government data show.
“When people look at rising prices for hamburger, butter, eggs and other protein sources from higher corn costs, that’s when more money ends up in the food basket,” said Minneapolis-based Michael Swanson, a senior agricultural economist at Wells Fargo & Co., the biggest U.S. farm lender. “We were hoping for a break, and we aren’t going to get it.”
http://www.businessweek.com/news/2012-07-08/u-dot-s-dot-corn-growers-farming-in-hell-as-heat-spreads-commodities#p2

It's not that the Midwest hasn't been extremely hot before, and it's not that it hasn't been incredibly dry.

But it's unusual for a vast swath of the Midwest to be so very hot and so very dry for so very long -- particularly this early in the summer.

The current heat wave -- which is spurring comparisons to the catastrophic heat of 1936 -- is "out of whack," meteorologist Jim Keeney said Friday in an interview with the Los Angeles Times.

Temperature records are being broken and residents are suffering in what Keeney called a "corridor of extreme heat," generally through Nebraska, Kansas, Missouri, Illinois, Indiana and into western Kentucky.
http://www.latimes.com/news/nation/nationnow/la-na-nn-midwest-heat-relief-20120706,0,5668282.story

The tassels that sprang up atop corn plants in recent days marked the pollination stage — a critical phase when kernels form on the cobs. Dry, extremely hot weather puts stress on plants and interferes with pollination. If kernels don’t form, no amount of rain will make a difference.

“We’re right at a critical reproductive stage,” said Chris Hurt, Purdue Extension agricultural economist. “Pollination problems just can’t be overcome, even if the weather turns. There’s no turning back. There’s just failure.”
http://www.jconline.com/article/20120707/NEWS/307070026/Critical-time-for-Indiana-crops?gcheck=1&nclick_check=1