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article imageDrought conditions cause problems both in U.S. and Canada

By Ken Hanly     Aug 9, 2012 in Business
Toronto - The central regions of the U.S lately have experienced both record heat and lack of moisture. Ten states had rainfall totals among their ten driest over a three month period. In Canada there are also some areas of drought.
In Canada most of the prairies have had normal or even above normal rainfall except for isolated areas such as southeast Manitoba. In Ontario the area west of Ottawa has been dry but southwest parts of Ontario have good growing conditions. In the U.S. the story is much worse with up to 63 per cent of areas having moderate or more severe drought conditions. Along with record heat many crops will suffer. The corn crop in the U.S. will be among those most hurt by the drought conditions.
U.S. farmers planted the most corn in over half a century. In an Aug. 7 report the USDA (U.S. Dept. of Agriculture) reports only 23 per cent of the huge crop is in good condition. Last year at the same time the figure was 60 per cent. The price of corn futures soared but have pulled back slightly after rainfall in some districts.
The price of many processed foods may increase although this may not happen until much later in the year or next year. The price of ethanol too will rise. The U.S. and Canada are not the only countries suffering drought. Russia, Ukraine and Kazakhstan expect drought conditions to shrink their crop by almost 30% from last year. As a result the price of wheat is rising even though North American crops are generally good.
Soybean crops are suffering in the U.S as well. Crops in good or excellent condition are down 32% from last year but improved conditions could help crops recover. Another area also badly hurt by drought is the livestock sector both in Canada and the U.S.
Just 16% of U.S. pasture and ranch land is in good or excellent condition. Last year at the same time the figure was 39%. In Ontario Canada lack of hay has sent prices soaring to three times normal. Near the capital Ottawa Ontario a rancher is selling off some of his herd of horses.. As livestock producers sell off animals to avoid having to feed them over winter with hay prices high, there will be a temporary glut on the market. This makes the situation worse because producers receive lower prices for their animals. Later on the situation will reverse no doubt.
While food price increase may take some time to work their way through the system, Tim Horton's has already decided to raise the price of some of its baked goods by five cents!
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