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(Reuters) - The most expansive drought in more than a half century intensified this week and stretched further into major farm areas of the western Midwest where crops had largely been shielded from the harsh conditions that decimated yields further east.
The moderate drought in parts of eastern Nebraska, northern Illinois and much of the top corn and soybean state Iowa was downgraded to a severe drought in the past week, climate experts said Thursday, and forecasts showed little relief in sight.
Prices of both corn and soybeans soared to all-time highs on Thursday, with corn climbing more than 50 percent in the past four weeks alone due to the worsening drought, squeezing ethanol and livestock producer margins and chilling export demand.
More extreme heat and scant rains were expected in the area over the next week, suggesting the poorest crop conditions since the historic 1988 drought would continue to erode, sapping yield potential at a time when supplies will be uncomfortably tight.
"We're seeing increasing areas of moderate to severe drought across Nebraska and Iowa, and nothing has improved in Illinois. In fact, things have gotten worse," said Sterling Smith, analyst with Citigroup.
"The areas around the Nebraska-Iowa border in particular have been some of the better performing areas where we haven't seen as much damage. There is going to be, over the next eight days or so, intense heat and no rain so I think we'll see further crop losses coming from there," he said.
Stronger yields from those areas had, until recently, had been expected to offset lower production from drought-decimated crops in Indiana, Missouri and southern Illinois.
More than 70 percent of the nine-state Midwest was in some stage of drought in the week ended July 17, up from 63 percent the prior week, according to the Drought Monitor, a weekly report compiled by climate experts.
The Midwest produces about 75 percent of the corn and soybeans grown in the United States, and half of that region was in severe to exceptional drought, up from about a third of the region a week earlier, the Drought Monitor reported.
Severe drought expanded to encompass nearly 59 percent of Iowa, up from about 13 percent the previous week. Ninety-five percent of No. 2 corn and soy state Illinois was in severe drought or worse, up from about 66 percent a week ago.
"This past week was not a very favorable one. Statewide average rainfall (in Iowa) was much below normal and temperatures much above normal," Harry Hillaker, state climatologist with the Iowa Department of Agriculture. "There's not much left of the corn belt that's in good shape."
"The soil moisture in Iowa is pretty much gone so there's not much to keep crops going. Even if temperatures went down 5 degrees and rainfall increased 50 percent for the rest of this month, it might slow the rate of decline but it's not going to reverse the decline in crop conditions and the ultimate yield."
Drought also tightened its grip on the High Plains, with 68 percent of the six-state region in severe drought or worse, up from 56 percent the prior week, the Drought Monitor showed.
Nearly 64 percent of Kansas was in extreme to exceptional drought as of Tuesday, up from 28 percent the previous week.
Conditions in Nebraska also worsened, with 75 percent of the state in severe drought or worse, up from 55 percent the week before.
Meteorologists are calling it the worst drought since 1956.
Reporting by Karl Plume in Chicago; Editing by John Picinich and Bob Burgdorfer