* Farms told to stop using surface water for irrigation
* Surface water used in only 10 pct of irrigation systems
* Nebraska corn 70 pct silking, when water need is higher
* Crop conditions drop due to worsening drought (Updates with Kansas restrictions)
By Karl Plume
July 16 (Reuters) - More than 1,100 farmers in Nebraska have been ordered by the state's Department of Natural Resources to halt irrigation of their crops because the rivers from which they draw water have dropped due to a worsening drought.
The orders come as the central United States is enduring the worst drought in a quarter century, which has parched corn and soybean crops and sent prices of both commodities to near-record highs.
As of Friday, orders had been sent to a total of 1,106 farmers in the country's No. 3 corn-producing state and fourth-largest soybean state, the department confirmed on Monday.
The orders affected only irrigation systems that draw from surface water, mostly rivers and creeks, and not systems that draw from wells, a department spokesman said.
Since more than 90 percent of Nebraska's irrigation systems draw f rom w ells and not surface water, the impact on the state's overall crop yield would not be as severe. Many of the affected farms also increased irrigation in recent days in anticipation of the shutdown order.
"Farmers, seeing the rivers falling, anticipated the situation and pretty much watered everything up. We're probably good to go for about two weeks without any real problems," said Paul Hay, a University of Nebraska extension educator.
"After that, if the river doesn't come back up and they can't resume irrigating, the crop will start paying the price. Probably 30 to 40 percent of the (corn) yield potential of their crop would be at risk," he add ed.
Soybeans do not reach their most critical development phase until August so t heir y ields can still rebound.
As of Sunday, 70 percent of Nebraska's corn was in the delicate silking stage, d uring which the crop pollinates and heat and lack of water can be most damaging to yields, according to a government crop progress and condition report on Monday.
Forty-three percent of the state's crop was rated by the U.S. Department of Agriculture to be in good-to-excellent shape as of July 15, down from 47 percent the prior week due to the deepening drought.
Nearly the entire state is under some level of drought, more than half of it classified as severe drought or worse, according to the weekly U.S. Drought Monitor.
Roughly half of the cropland and pasture in Nebraska is irrigated, unlike other top crop producing states like Iowa and Illinois which rely largely on rainfall.
There were about 46,800 farms and ranches operating in Nebraska in 2011 covering around 45.5 million acres, according to the U.S. Department of Agriculture.
In neighboring Kansas, the state has ordered more than 200 land owners to stop drawing water from 10 streams impacted by the drought, according to the Division of Water Resources, which is part of state's Department of Agriculture. Under water rights laws, the restrictions are enforced whenever streams dip below desirable flow levels, said David Barfield, chief engineer for the division. (Additional Reporting by Kevin Murphy in Kansas City; Reporting by Karl Plume in Chicago; Editing by Jim Marshall, Gary Crosse, Greg McCune and Bob Burgdorfer)