Corn, soy harvest advances at record pace

A piece of corn is seen in a hay bale at a farm in Fredericksburg, Texas September 9, 2011.

CHICAGO (Reuters) - The world's largest corn and soybean harvest advanced at a record pace in the United States last week that exceeded trade expectations, U.S. government data showed on Monday, when harvest pressure tumbled Chicago grains futures.

The corn harvest was 26 percent complete as of Sunday, the Department of Agriculture's weekly crop progress report showed, compared with expectations for 24 percent based on a Reuters poll of 11 analysts, and up from 15 percent a week ago.

Farmers also harvested 10 percent of the soybean crop in the world's largest grains exporter, compared with expectations for 9 percent, and up from 4 percent the previous week.

The fast pace of the harvest could put more pressure on prices in the cash market as farmers sell more of their grains, especially corn, due to concerns over diseases such as aflatoxin that could hurt quality.

"These are extremely rapid harvest paces," said Karl Setzer, a commodity trading advisor with MaxYield Cooperative in Iowa.

"In all reality, the harvest could be over by the end of September or first week of October," he said, adding that the harvest was running about 30 days ahead of normal.

Farmers planted their crop this year at a record pace after one of the mildest winters on record, but the weather dried up leading to the worst drought in half a century devastating the corn and soybean crops this year.

The USDA forecast in August that this year's corn crop will be the smallest in six years and soybean production the smallest in nine years due to the drought.

The drought pushed corn and soybean futures at the Chicago Board of Trade to record highs this summer, but markets have since come off their peaks after several revisions of the crop size by the USDA. On Monday, anecdotal accounts of yields being better than expected tumbled grains futures.

Setzer, whose cooperative works closely with farmers in the Midwest, said producers sold significant amounts of corn when prices hit $8 per bushel and also out of fear supplies might be tainted by aflatoxin.

CBOT December corn fell 4.3 percent to settle at $7.48 per bushel, while November soybeans fell by the daily trading limit of 70 cents to $16.69 per bushel.

USDA data showed the corn harvest in Illinois, typically the No 2 corn state, was 36 percent complete as of Sunday, up from 21 percent a week earlier. In top corn state Iowa, the harvest was 22 percent complete, up from 10 percent.

For soybeans, the harvest was just kicking off in Iowa and Illinois, with 6 percent and 3 percent complete, respectively. The southern harvest was past mid-point, with Louisiana at 52 percent and Mississippi at 58 percent.

(Editing by Maureen Bavdek and Andre Grenon)