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CHICAGO (Reuters) - The worst drought in more than half a century in America's Corn Belt has slashed the corn crop to the lowest in five years, leading to a plunge of corn supplies to the smallest in 17 years by next summer, a Reuters poll of 21 analysts showed on Monday.
That would result in the third year in a row of razor thin corn stocks, keeping prices at record highs and rationing demand for the world's most popular feed grain, analysts said.
Updated weather forecasts do little to change that scenario since the corn crop is basically done for the year, leading to little hopes for improvements in crop output.
Crop-friendly showers and cooler temperatures are expected this week in much of the drought-stricken U.S. Midwest crop region but a return to heat and dryness is likely by next week, an agricultural meteorologist said on Tuesday.
"There were very good rains over the weekend and another round of showers are expected in the northwest Midwest today and tomorrow," said Don Keeney, a meteorologist for MDA EarthSat Weather.
Keeney said the rains came too late to help the corn crop but some of the late planted soybeans may benefit.
Chicago Board of Trade (CBOT) corn prices surged to record highs above $8 per bushel in late July and remained above the $8 mark on Tuesday as the falling corn supply kept investors bullish on the corn market.
CBOT new-crop December corn futures were up 1-1/2 cents per bushel at $8.06-1/2 at 7:50 a.m. CDT (1250 GMT) on Tuesday.
Analysts also slashed the harvested corn area by 10 percent from initial seedings and expect corn yield to fall below 128 bushels per acre. That would be the lowest yield in 14 years and down 23 percent from the record 166.0 bushels that was initially forecast by the U.S. government.
In its July crop report, the U.S. government slashed an unprecedented 20 bushels per acre from its initial record yield outlook for the current forecast of 146 bushels.
Analysts expect next year's 2012/13 U.S. corn ending stocks at 660 million bushels, which would be a tenuous 17-year low and nearly half of what the government predicted in July.
The U.S. Department of Agriculture (USDA) at 7:30 a.m. CDT (1230 GMT) on Friday will release its August crop production and supply/demand reports.
Because of the drought, corn prices this summer soared to record highs of more than $8 per bushel. That has led analysts to lower their forecasts for the amount of corn that will be harvested and to scale back their outlooks for corn usage.
"With the supply falling we have to start rationing demand. I sense importers are not utilizing U.S. corn now but are buying Brazilian corn and the ethanol output dropped in July," said Jerry Gidel, analyst for Rice Dairy LLC.
"Ethanol plants decided to take maintenance in July and wait for the new-crop to come in," he said.
Gidel pegged U.S. corn exports for next year at 1.3 billion bushels, down 300 million from USDA's July forecast. He also pegged corn used for ethanol at 4.550 billion bushels, down from USDA's July forecast of 4.9 billion, and corn for feed use at 4.350 billion compared with USDA's July forecast of 4.8 billion.
The polled analysts expect a sharp drop in the amount of corn harvested for grain as many farmers may collect insurance payments rather than combining the drought-damaged crop.
"Harvested acres is a big question mark and is a moving target. The final on that one won't be known until October, estimates are all over the map and is the wild card this year," Gidel said.
The average estimate for harvested area was 86.404 million acres, down more than 10 percent from the 96.41 million acres planted which was the largest seeded area in 75 years.
The harvested area also was down 2.7 percent from the USDA's outlook in July for 88.85 million.
Last week Informa Economics pegged the harvested corn area at 85.671 million acres.
Reporting By Sam Nelson