In Heartland, Scant Rain Since June

Drought shrivels crops and raises prices; some farmers will actually benefit AGRICULTURE

THE United States is in the middle of its fourth major drought in a decade.The dryness started later and is less widespread than the previous drought in 1988. But it has left its mark, sizzling crops in some of the richest corn and soybean land in the US and causing sagging grain markets to snap back sharply. "This year started out looking like it was going to be a pretty good year - and then somebody turned off the faucet," says Harry DeLong, Ohio's agricultural statistician. This year the US farm sector was supposed to start rebuilding its grain stocks, which have fallen dramatically since the severe 1988 drought. But the dry spell, along with flooding in China and a severe drought in the Soviet Union, means the world will have to wait another year to begin rebuilding grain stocks. The International Wheat Council now estimates world wheat production at 555 metric tons (20.4 billion bushels) - down from last year's record 595 million metric tons. Here in the US, the dryness extends from portions of Ohio through the northern half of Indiana and Illinois to the eastern half of Iowa. Although localized showers have spared some areas, the region overall has received little rain since mid-June. In Iowa's east-central crop district, around Cedar Rapids and Iowa City, just over 1/2-inch of rain has fallen since June 15 - nearly 7 inches below normal, says Harry Hillaker, the state's climatologist. Clinton, Iowa, on the border of the Mississippi River, endured its driest July since records began to be kept in 1894 - just 15/100 of an inch. "You would see such extreme variation," says Jerry Clampet, Illinois' state statistician who drove from Champaign to Kankakee last week. Some fields looked green because of local showers. Then, a mile or two later, crops were shriveled by the lack of moisture.

Soybeans drop in quality In its weekly report released Aug. 5, Illinois rated 91 percent of its cropland short of moisture. The state said 35 percent of its corn crop was poor or very poor; another 38 percent was rated fair. Soybeans suffered their biggest weekly drop of the summer. Last week 47 percent of the crop was rated good or excellent; this week, only 23 percent. Indiana saw similar drops in quality: last week's report pegged 23 percent of the corn crop as good; this week only 6 percent. Soybeans went from 31 percent to only 6 percent good this week. While much of the damage to corn is irreversible, soybeans still could recover if rain comes soon, says Jon Davis, agricultural meteorologist with Shearson Lehman Brothers. "We are going to see some minor relief this week" from rain. Grain markets tumbled Monday on that news. But so far, there's no general relief in sight, meteorologists say. Mr. Hillaker says rains have to come in the next 2-1/2 weeks to save the soybean crop. While the weather has been extremely dry, the damage has not been as severe as in the 1988 drought because the weather has been cooler. In 1988, Iowa had 12 days that reached 100-degrees or more; so far this year, only one day has been that hot. All this weather activity has had a profound effect on the grain markets. "We have seen prices turn around like nobody expected," says Stewart Ramsey, economist and agricultural forecast manager for the WEFA Group, an econometric firm in suburban Philadelphia. Before the drought, WEFA had forecast an 8.2 billion bushel corn crop and falling corn prices to around $2 a bushel by harvest time. Instead, the price of December corn futures at the Chicago Board of Trade - a leading indicator - bottomed out at $2.20-1/2 on July 8 and have climbed more than 15 percent since then. Forecasters now expect a 7.5 billion to 7.7 billion bushel corn crop. The price of soybeans, reflected in the November futures price, has risen about $1 - or nearly 20 percent - since July 8. Before the drought, WEFA had forecast a soybean harvest just under 2 billion bushels. It now expects 1.88 billion bushels. Since August is the crucial month for soybeans, experts say the size of the harvest still hangs in the balance.

Forecasters raise estimates The drought has several implications. It has caused some forecasters to raise slightly their estimates of food price hikes this year. One economist raised it from 3.8 percent to 4.0 percent - still below the 5.8 percent notched in 1989 and 1990. Farmers as a whole usually benefit from droughts - and 1991 appears to be no exception. While many producers will lose money because of heavy crop damage, many more producers will escape the drought and be able to sell their crops at much higher prices. The US has already loosened its restrictions for this fall's wheat-planting season, which will mean more acres of wheat will be planted. Mr. Ramsey and other analysts are certain that restrictions on corn planting will also be loosened for next spring.