* USDA corn, soy conditions down 8 points, worse than
* Hot weather to persist this week, rains possible next week
* Analysts downgrade forecasts for U.S. corn yields
* U.S. confirms near-record soy sales as importers grow
* Wheat hits 9-1/2 month top, grain supply to tighten
(Recasts, updates with closing prices, fund buying totals, crop
By Karl Plume
CHICAGO, July 2 U.S. corn futures surged 3
percent on Monday and soybeans hit their highest price since
2008 as a worsening U.S. Midwest drought eroded yield prospects
and a large soybean export sale showed importers growing anxious
over shrinking supplies.
Corn hit a 9-1/2 month peak as sweltering heat and scant
rainfall punished the crop, extending last week's 15 percent
surge as forecasts of unrelenting heat and relatively little
rain threatened to reduce the number of kernels that form on
each cob during pollination, a critical stage of development.
Front-month soybeans climbed to a four-year high on a
continuous chart, supported by the stressful weather and
confirmation that an unnamed buyer -- widely believed to be
China -- had purchased nearly 1.2 million tonnes of soybeans
from the United States, the fifth largest single-day U.S. soy
export sale on record.
Midday forecasts offering hope for slightly wetter weather
next week helped pare gains for soybeans, which do not enter
their most critical growth phase for another month, but did
little to diminish fears that the corn crop has already been
dealt a blow by one of the hottest, driest Junes on record.
"The weekend rains were a little disappointing. It looks
like the heat's going to stick around for another four or five
days," said Alan Kluis, president of Kluis Commodities.
"With rain in August, the soybeans can still come back, but
the dryness in corn during pollination can do irreversible
damage," he said.
Wheat jumped to a 9-1/2 month high, buoyed by its own
tightening supply balance with the outlook diminishing for crops
in regions such as the Black Sea, while the surge in corn prices
could lead to increased volumes of wheat being used for animal
STORMS MISS THE MARK
Storms over the weekend brought light and isolated rain to
parts of the Midwest, but much-needed precipitation missed a
large portion of the region. Temperatures were forecast to
remain in the 90 to low-100 degrees Fahrenheit range (32-38
degrees Celsius) for most of this week.
Midday weather models suggested wetter weather in Nebraska,
Iowa and northern Missouri next week and rains in the northern
Delta and Illinois and Indiana the following week, although the
forecast was not conclusive.
"If that model were to be true, crops could improve quite a
bit," said Drew Lerner, agricultural meteorologist and owner of
World Weather in Kansas City.
New-crop December corn on the Chicago Board of Trade
rose for the sixth time in seven sessions, adding 21 cents, or
3.3 percent, to $6.55-3/4 a bushel. It was the highest price for
that contract since September.
New-crop November CBOT soybeans rose 10-1/4 cents, or
0.7 percent, to $14.38 a bushel after setting a contract high of
$14.55-3/4. The lightly traded front-month contract peaked
at $15.42, the highest for a spot contract since July 2008.
Commodity funds bought an estimated net 17,000 corn
contracts and 6,000 soybean contracts, trade sources said.
CROP CONDITIONS ERODE
Gains may accelerate as the scale of U.S. crop damage
After the close of trade, the U.S. Department of Agriculture
said corn and soybean condition ratings both declined 8
percentage points from a week ago. Analysts polled by Reuters
expected a 5 point drop in corn and a 3 point drop in soybeans.
Hot, mostly dry weather in the forecast this week suggests
condition ratings will decline further in the next update as
well, analysts said.
Cropcast, a division of MDA EarthSat Weather, told the
Reuters Global Ags Forum it had cut its 2012 U.S. corn yield
forecast by three bushels per acre to 150.6 bpa and trimmed its
soybean yield view to 40 bpa, down 0.6 bushel, due to a hot and
dry weather outlook.
The company, which specializes in agricultural weather
forecasting, joined several other forecasters that have slashed
their crop projections in recent days, including Informa
Economics and investment bank Goldman Sachs
Soybean prices received an added boost from USDA's
confirmation Monday of a 1.19-million-tonne private exporter
sale to unknown destinations, widely believed to be top importer
China. It was the fifth largest single-day sale on record and
the largest since February.
Wheat prices benefited from the sharp rise in corn and
expected tighter supplies as the outlook dims for wheat and
maize crops in the Black Sea region.
The International Grains Council cut its forecast for global
wheat production in 2012/13 to 665 million tonnes from a
previous forecast of 671 million as the outlook for the crop in
key exporter Russia deteriorated.
CBOT September wheat rose 15-1/4 cents, or 2 percent,
to $7.72-1/2 after peaking at $7.74-3/4, the highest level for
the contract since September 2011.
Prices at 3:24 p.m. CDT (2024 GMT)
LAST NET PCT YTD
CHG CHG CHG
CBOT corn 692.50 20.00 3.0% 7.1%
CBOT soy 1532.25 19.50 1.3% 27.8%
CBOT meal 442.50 6.50 1.5% 43.0%
CBOT soyoil 52.18 -0.03 -0.1% 0.2%
CBOT wheat 754.50 15.50 2.1% 15.6%
CBOT rice 1439.00 20.00 1.4% -1.5%
EU wheat 232.00 5.25 2.3% 14.6%
US crude 83.67 -1.29 -1.5% -15.3%
Dow Jones 12,871 -9 -0.1% 5.4%
Gold 1596.61 -0.38 0.0% 2.1%
Euro/dollar 1.2582 -0.0092 -0.7% -2.8%
Dollar Index 81.8670 0.2400 0.3% 2.1%
Baltic Freight 1013 9 0.9% -41.7%
(Additional reporting by Nigel Hunt in London, Naveen Thukral
in Singapore, Colin Packham in Sydney and Valerie Parent in
Paris; Editing by Alison Birrane, Dale Hudson, Jim Marshall and