Extreme heat and lack of moisture has left crops stunted in much of the Midwest corn and soybean belt from Iowa to Ohio. Indianapolis hasn't seen significant rainfall in 45 days, tying the Indiana city's record for its longest dry spell in more than 100 years.
Lakes are drying up and a National Weather Service hydrologist told The Indianapolis Star the region needs continuous rains of at least an inch weekly through the rest of the growing season to save the crop.
The U.S. Department of Agriculture Monday said 43 percent of Wisconsin's corn crop and 39 percent of soybeans are in poor or very poor condition after nearly month of dry conditions. In neighboring Illinois, state university Extension economist Gary Schnitkey estimated crop insurance payouts could exceed $3 billion this year, The Peoria Journal Star reported.
"The cost of subsidizing crop insurance premiums has exploded, from $1.5 billion in 2002 to $7.4 billion in 2011," Bruce Babcock, an economics professor at Iowa State University told the newspaper.
The high temperature was expected to hit 101 in Madison, Wis., Tuesday after Monday's 98 degrees broke a record set in 1931. Southern Wisconsin has gotten just 0.31 inches of rain since June 1 and 2 or 3 inches of rain is needed for the corn to pollinate in the critical 10-day period after it tassels.
"Topsoil has dried out and crops, pastures and rangeland have deteriorated at a rate rarely seen in the last 18 years," the National Oceanic and Atmospheric Administration said in a report Monday.
Bill Lapp, president of Advanced Economic Solutions in Omaha, said 10 percent of the crop is definitely a loss, The Washington Post reported. The price of corn has gone up 50 cents a bushel in two months to $7.72.
"Minimally, we have lost 10 percent of the crop, and it wouldn't surprise me if we have lost 20 percent," Lapp said. "We have not seen this kind of weather in at least 30 years. Farmers in many areas are resigned to the fact that they have anywhere from modest losses to complete losses of their crop."
More than half, 55 percent, of the lower 48 states is now classified as being in at least moderate drought, the National Climatic Data Center said. That is the highest percentage since 1955.
The U.S. Agriculture Department declared drought disasters last week in 1,000 counties in 26 states and the 2012 drought potentially could have worse economic impact than the severe 1988 drought.
Agriculture experts say in the short term prices of beef, chicken and pork could come down if farmers sell their livestock rather than buy expensive feed for the animals. But food prices over the long term will rise.