Iowa's drought conditions have farmers budgeting water use

By P.J. Huffstutter

CHICAGO, March 21 (Reuters) - As Iowa heads toward its fourth year of drought, grain farmers prepping for planting next month are facing mandatory water restrictions and livestock producers are searching for supplies.

The nation's top corn-producing state is seeing one of its driest periods going into a growing season, according to Thursday's update from U.S. Drought Monitor.

Such dry conditions will allow farmers to plant quickly this season, a bearish move for grain futures that have already been trending downward this year. The U.S. last year harvested a record corn crop despite drought conditions in some areas, and corn prices have hovered around the lowest in more than three years due to plentiful global supply.

Iowa had enough sub-soil moisture that farmers were able to produce a bountiful yield last fall with timely rains, said Don Roose, president of Iowa-based U.S. Commodities.

"This year, we're running on empty, moisture-wise," Roose said.

About 23% of Iowa's corn acres and 19% of its soybean acres are in an extreme drought, according to Gro Intelligence, a New York-based data and analytics firm that analyzed Thursday's drought update and U.S. Department of Agriculture data for Reuters.

In comparison, less than 2% of the state's corn and soybean acres were in an extreme drought during the same time a year earlier, Gro Intelligence found.

Though forecasts for spring rains could temporarily improve Iowa's situation, weather models predict that drought conditions in northern and eastern parts of the state will intensify going into the summer, said Brad Pugh at the National Weather Service's (NWS) Climate Prediction Center.

Drought concerns prompted Iowa's Poweshiek Water Association to issue a mandatory water conservation order this month to customers in eight counties and surrounding areas.

Among other things, it warned that, starting April 1, crop farmers wanting to spray diluted chemicals or other inputs on their fields may need to source water from private wells or outside the service area.

That order will impact Cordt Holub. Last year, his cattle were able to drink at a nearby stream - until it ran dry. Water restrictions could mean shifting his crop farming practices later this season, which may impact yields.

"Come summertime, if the water isn't there, we're going to have to skip on a fungicide pass, maybe an insecticide pass," Holub said. "We need water to farm."

NWS scientists also are tracking how a potential shift to a La Nina weather pattern this summer may impact interior river levels this fall - when U.S. grain harvests hit the global markets.

(Reporting By P.J. Huffstutter in Chicago.Editing by Marguerita Choy)