(Corrects day of the week in lead to Wednesday)
* Soybean prices set record high, corn near record
* U.S. expands drought aid, Vilsack warns of higher food
* No soaking rains seen for wilting corn, soy; herds culled?
By Russ Blinch and K.T. Arasu
WASHINGTON/CHICAGO, July 18 Oppressive heat and
a worsening drought in the U.S. Midwest pushed grain prices near
or past records on Wednesday as crops wilted, cities baked and
concerns grew about food and fuel price inflation in the world's
top food exporter.
Soybean prices at the Chicago Board of Trade set a record
high and corn closed near a record as millions of acres of crops
seared in triple-digit heat in the Corn Belt. Corn fields have
been plowed up in many locations for lack of rain. Now soybeans,
which develop later than corn, are in the bull's eye.
"I get on my knees everyday and I'm saying an extra prayer
right now," U.S. Agriculture Secretary Tom Vilsack told
reporters after briefing President Barack Obama. "If I had a
rain prayer or a rain dance I could do, I would do it."
Vilsack said the drought was getting worse for hard-hit
farmers and the wilting crops will mean higher food prices.
"Part of the problem we're facing is that weather conditions
were so good at the beginning of the season that farmers got in
the field early, and as a result this drought comes at a very
difficult and painful time in their ability to have their crops
have good yield," Vilsack said.
Drought conditions now extend over more than 60 percent of
the lower 48 states, the government said. The Department of
Agriculture on Wednesday extended drought aid to an additional
39 counties designated as primary natural disaster areas,
bringing such aid to a total of 1,297 counties across 29 states.
Vilsack said rising grain prices would mean meat and poultry
prices will be higher this year and next, although the inflation
may be delayed as farmers start culling their herds due to high
feed prices and meat supplies stay adequate.
But the outlook for higher food prices could add up to
another headache for Obama as he faces a November election with
high joblessness and slower economic growth.
Hard-hit livestock producers and other groups want the
Environmental Protection Agency to give oil refiners a waiver
from the mandate to blend ethanol into gasoline, arguing demand
for the corn-based fuel was driving up corn prices. About 40
percent of the U.S. corn crop now is used to produce ethanol.
But Vilsack said there was no need for such action as yet.
"There is no need to go to the EPA at this time based on the
quantity of ethanol that is in storage," he said.
The U.S. drought is expected to be felt worldwide as the
world's biggest grain exporter struggles with shortfalls. The
United States exports more than half of all world corn shipments
and is also the single top exporter of wheat and soy.
"The dramatic rise in grain prices in the past few weeks is
shaping up to be a serious financial blow for wheat importing
countries," one German trader said on Monday.
"African and Middle Eastern countries are now facing painful
rises in import bills."
WEATHER OUTLOOK STILL HOT AND DRY
Forecasters were calling for scattered showers on Wednesday
evening in some parts of the east coast and Midwest. But relief
was seen as too little and too late for many of the key areas of
the central Plains and Corn Belt.
"There are no soaking rains in sight, nothing to relieve
the drought," said World Weather Inc meteorologist Andy Karst.
"There will be some light rains today through Friday in the
Iowa and Illinois, which produce about a third of U.S. corn
and soybeans, continued to swelter on Wednesday in temperatures
at or above 100 degrees (37.8 degrees Celsius) with little to no
Corn prices have jumped more than 50 percent in the last
month as the crop wilted in many locations during its key growth
stage of pollination.
Corn for September delivery at the Chicago Board of Trade
closed at $7.95 a bushel, near last summer's record high of
$7.99-3/4. Soybeans for August delivery closed at $16.85-1/2, a
new record high.
"Now, it's soybeans' turn. The next two weeks will be
critical for them. There is a chance for catastrophic problems
in soybeans," said grains analyst Don Roose of U.S. Commodities
in Des Moines, Iowa
"The summer of 2012 is on pace to finish third hottest on
the list of 62 summers since 1950," said Steven Root, a
meteorologist with WeatherBank Inc. "But it is still in the
running for number two or one."
In many parts of the country, power grids were under
pressure from demand on air conditioning but most were holding
up. In New York City, Consolidated Edison reduced its power
voltage in some Manhattan neighborhoods, resulting in brownouts.
Low water levels in many lakes and rivers were hampering
transportation, with hydroelectric plants tapping water in
locations like Arkansas and the Army Corps of Engineers issuing
warnings to consumers about water levels.
Water usage for lawns and recreation continued to see
restrictions in many areas of the country.
In crop areas, farmers saw further headaches from plant
diseases like fungus and crop pests like spider mites on
soybeans or rootworms or Japanese beetles in corn that appear in
But one silver lining in many areas from weeks of drought
was a pleasant surprise: fewer mosquitoes, which lack moist
breeding places. "I can live with that part of the drought,"
said Scott Trout as he left a playground in Westwood, Kansas,
with his wife and two children.
(Additional reporting by Timothy Gardner; Writing by Peter
Bohan; Editing by Todd Eastham)