Based on conditions as of 1 August, NASS expects yields to average 123.4 bushels per acre, down 23.8 bushels from 2011. If realized, this will be the lowest average yield since 1995. Area harvested for grain is forecast at 87.4 million acres, down 2% from the June forecast but up 4% from 2011.

Other food-related items from the August forecast include:

• Soybean production is forecast at 2.69 billion bushels, down 12% from last year. Based on August 1 conditions, yields are expected to average 36.1 bushels per acre, down 5.4 bushels from last year. If realized, the average yield will be the lowest since 2003. Area for harvest is forecast at 74.6 million acres, down 1% from June but up 1% from 2011.

• All wheat production, at 2.27 billion bushels, is up 2% from the July forecast and up 13% from 2011. Based on 1 August conditions, the United States yield is forecast at 46.5 bushels per acre, up 0.9 bushel from last month and up 2.8 bushels from last year.

Concerns about harvest levels under the current drought have led to suggestions and calls for waiving the requirements of the renewable fuels standard (RFS) in the US. In an opinion piece published yesterday in the Financial Times, for example, José Graziano da Silva, the director-general of the United Nations Food and Agricultural Organization (UN FAO) suggested that the US temporarily suspend its mandate for biofuels to prevent a food crisis caused by drought and rising prices.

The worst drought for 50 years is inflicting huge damage on the US maize crop, with serious consequences for the overall international food supply...Maize prices have already gone higher than their 2008 and 2011 peaks, increasing by 23 per cent during July alone. Wheat prices have followed maize prices upwards. Repercussions are already being felt in the US livestock sector.

...With world prices of cereals rising, the competition between the food, feed and fuel sectors for crops such as maize, sugar and oilseeds is likely to intensify. One way to alleviate some of the tension would be to lower or temporarily suspend the mandates on biofuels. At the moment, the renewable energy production in the US is reported to have reached 15.2bn gallons in 2012, for which it used the equivalent of some 121.9m tonnes or about 40 per cent of US maize production. An immediate, temporary suspension of that mandate would give some respite to the market and allow more of the crop to be channelled towards food and feed uses.

However, the national trade association for the US ethanol industry, the Renewable Fuels Association (RFA), argues that the USDA forecast of 10.8 billion bushels of corn doesn’t justify waiving the RFS.

This report shows what many already knew—this drought has taken a significant toll on American farmers. The persistently hot and dry weather have stressed crops as well as livestock and as a result there is expectedly to be less of each available.

What this report does not do is provide justification for waiving the Renewable Fuel Standard for the rest of 2012. Given the abundance of RFS credits, ample ethanol stocks, and various other flexibilities, obligated parties under the RFS will have every opportunity to demonstrate compliance this year.

Moving forward, the market remains the best option for rationing corn demand. The market has already begun taking advantage of the RFS’ flexibility and will continue to do so into 2013. As the crop is not yet in the bin, we do not know the final harvest. Nor do we yet know how farmers around the world will respond or how American farmers will react next spring. Should unfavorable weather continue to plague American farmers and strain world supplies of grain, responsible discussions about appropriate targets for the RFS for the remainder of next year may be warranted. Until then, calls to indiscriminately waive the RFS for 2012 or 2013 remain premature.

—RFA statement