Well, I ran across this and felt obligated to post it and obligated to either pick on my foals--or give them a chance to dry out in the rainy season!
Rain rot, also known as rain scald (on the lower limbs, it may be referred to as dew poisoning), is caused by a bacteria that has fungal characteristics. This bacteria lives in soil and is commonly observed during prolonged wetness. Infected animals are often considered a source of infections for spread of this contagious disease.
Poor stable hygiene and skin irritation from insect bites often are contributing factors. Infected horses generally will have a series of small bumps along their backs. These lesions will progress to circular scabs. Removal of the matted tufts of hair is painful and can result in raw, bleeding areas. Veterinarians often refer to the small tufts as "paintbrush lesions." Lesions are commonly observed on the back, rump, neck and legs.
Affected animals should be kept dry and protected from biting insects.
The scabs should be removed while bathing the horse daily for seven days with either iodine shampoo, chlorohexidine shampoo or benzoyl peroxide. Severe cases may require treatment with antibiotics for a week or two. Warm sun and dry weather are nature's best cure for rain rot. Skin problems should be addressed early in the disease before the itching, hair loss and subsequent inflammation become severe enough to result in oozing, crusting and scaling of the skin.
Diagnosis of any skin disease generally requires more investigation than just a simple glance.
Mark Crisman, D.V.M.
Virginia Tech