The 2012 drought, which now affects 54.6 percent of the contiguous 48 states, ranks among the 10 largest drought areas of the past century, according to a Weather Channel report.
The 2012 drought now covers slightly more area than the 1936 drought. However, other droughts in the Dust Bowl years – particularly the extreme drought of 1934 – still rank higher, according to the report. Five years have exceeded the current drought in area affected. They are 1931, 1958, 1954, 1939 and 1934, when drought covered 79.9 percent of the nation.
The extensive U.S. drought conditions are creating significant upward pressure on feed grains and eroding margins for pork producers. “Current corn cash price (OmahaBasis) is around $7.50 per bushel, soybean meal is up 36 percent from last year at $474 per ton and dried distillers’ grains with solubles (DDGS) prices are also up 35 percent,” according to the CME Group Daily Livestock Report.
“The outlook for hog sector profitability has deteriorated significantly over the past month,” says Rich Pottorff, Doane chief economist. “Feed costs for this fall and winter have increased much more than hog futures prices have.”
According to Pottorff, the result could be more sows and gilts coming to market – further hurting cash hog prices in the short term – but maybe reducing production by early in 2013.
The hot weather blanketing much of the country is also reducing pork demand. “High temperatures across the country appear to have limited grilling demand, with prices for ribs and loins down sharply last week,” according to the CME report..
“Weak pork demand continues to be a major factor for hog prices,” Pottorff says.
Preliminary data show that at the end of June, drought affected the highest percentage of the United States since December 1956, according to the Weather Channel report. It is the sixth-highest peak percentage on record. While some historical droughts were extremely intense, they focused more on specific regions rather than sprawling across large swaths of the country. Droughts in 1988, 2000, and 2002 each included over 35 percent of the country in the "severe" to "extreme" categories. By comparison, severe to extreme drought covers 32.7 percent in June 2012.
Looking ahead, chances for rain do not offer much hope. “The outlook so far is for current drought conditions to persist,” according to the CME report.