The worst drought since 1988 has gripped a large portion of the Midwest, shriveling corn yields and producer profits.

The drought and heat could not have come at a worse time, according to grain analyst Richard Brock, with Brock Associates. “Early planted corn has turned out to be a detriment because it has matured too early. All this heat is hitting during the pollination period.

“The heat is hurting a lot more than people have recognized. There are some areas where the proven yields are 220 bushels to 225 bushels an acre that could end up less than 100 bushels, maybe as low as 70 bushels.”

The dry weather will not only impact yield but harvested acres of corn as well, as producers disk up dead and dying plants, Brock says.

The Midwest drought extends from Bloomington, Ill., south and east. “North of Bloomington and most of Minnesota and Iowa are still in pretty good shape,” Brock said. “But crops that were in good shape five or six days ago, where there was no rain and temperatures over 100 degrees, we’ve seen some considerable deterioration.”

According to meteorologist Drew Lerner, World Weather, Inc., the culprit for the drought is a high pressure ridge over the Midwest. The ridge, which has strengthened more than meteorologists had anticipated, “dried down the topsoil to the point where there is no moisture feedback into the atmosphere,” Lerner said. “So there’s nothing to stimulate any kind of cooling.”

Little rainfall relief

The ridge was expected to begin moving westward in early July, bringing some cooler temperatures to the Midwest from Canada. But little relief in terms of rainfall is in the forecast. By mid-July, the ridge was expected to have begun a trek back toward the eastern United States. But this is not likely to provide any relief in terms of moisture either.

“This is something that is probably going to be around for a while,” Lerner said of the Midwest situation. “We’ll probably see some changes, but we’re at the point of no return so to speak.”

Once the high pressure ridge moves back eastward, it is expected to open up the Mid-South for moisture from the Gulf of Mexico, according to Lerner. The moisture not expected to reach Midwest states.

Corn futures have risen sharply on the expectation of significantly reduced U.S. corn yields. With corn futures trading above $7 a bushel, “it’s a runaway bull market,” Brock said. “You get some emotion in there, it could do anything in a very short time frame. Somewhere between $7.20 and $8.60 there are a lot of upside objectives. I wouldn’t rule that out.”

Brock noted that drought markets “peak quickly because the fundamentals of a short supply are obvious and get built into the market quickly. The top of the market will not likely occur until the public starts jumping on board, which they have not done yet. The blowoff top will likely happen before July is over.”

Brock said the sharp increase expected in corn prices will result in significant increases in corn acres both domestically and worldwide. This in turn will increase fertilizer demand and fertilizer prices much more than previously expected. With these fundamentals the best selling opportunity for the 2013 corn and soybean crops will likely occur within the next six weeks.”