While corn is pollinating, temperatures over 95F (35C) can stunt the growth of ears and prevent kernels from fully developing.
David Kellerman, a farmer in southern Illinois, one of the worst-hit areas, told AP: "Monday, Tuesday and Wednesday we had 108F. It just pretty much fried the corn."
The 12% cut in the yield forecast is the largest in memory and reignited a rally in grain prices. Corn on the Chicaco Board of Trade initially jumped 23 cents and later settled to a 15¢, or 2% gain, to $7.76 a bushel. Prices have climbed 34% in the last month.
Wheat and soybean stocks have also been hit by the drought and are lower than previously estimated.
Plunging corn yields are likely to push up meat prices, as corn is used to feed cattle. Meat prices were already rising and were expected to stay high after last year's drought in Texas forced many ranchers to scale back their herds.
Corn is also used as an ingredient in corn flakes, ketchup, bread and fizzy drinks, although it accounts for a small fraction of their costs compared to transport and marketing. Food prices typically climb about 1% for every 50% increase in average corn prices, said Richard Volpe, a USDA food markets research economist.
Corn, wheat and soybeans, the three most common U.S. crops, are used in a variety of foods from cereals and salad dressing to scones and cooking oil.
The U.S. government has already predicted food prices will increase by up to 3.5% this year.
However, even farmers who lose much or all of their corn are unlikely to go under. Most take out crop insurance to cover weather-related losses.
Intellpuke: You can read this article by Guardian Correspondent Julia Kollewe in context here: www.guardian.co.uk/environment/2012/jul/11/us-drought-threatens-food