Corn and soybean prices rise as dry Midwest weather threaten crops

Corn rose for the first time this week and soybeans gained for a second straight day on speculation that drier weather may damage crops in the U.S., the world’s largest grower and exporter.

A lack of rain in Illinois, Indiana and Ohio may stress as much as 15 percent of the crops, the Commodity Weather Group LLC said today in a report. Precipitation in June stunted root development, leaving plants more vulnerable to heat. Corn prices have risen 5.4 percent in July, and soybeans are up 8.4 percent, heading for the first monthly gain since April.

“The crops are unusually variable because of the wet weather last month,” said Brian Grete, the senior market analyst for the Professional Farmers of America newsletter in Cedar Falls, Iowa. “Uncertainty about the impact on final yields is encouraging some buying interest.”

Corn futures for December delivery rose 6 cents, or 1.5 percent, to $3.935 a bushel on the Chicago Board of Trade. The most-active futures slid 4.8 percent the previous two days on expectations that rain would nurture the Midwest crop.

Corn has risen 14 percent since June 29, the day before the government said U.S. farmers planted less this year than they had planned.

Soybean futures for November delivery rose 5.5 cents, or 0.6 percent, to $9.785 a bushel in Chicago. The oilseed has rallied after the government said U.S. reserves as of June 1 were the lowest in six years.

Crop Conditions

Crop conditions reported by the U.S. Department of Agriculture have worsened over the past five weeks because parts of the Midwest received record rain in June, said Gail Martell, the president of MartellCropProjections.com in Whitefish Bay, Wisconsin.

Iowa, the largest corn- and soybean-producing state, had the second-wettest June on record, according to data from the High Plains Regional Climate Center in Lincoln, Nebraska. Rainfall in Illinois and Nebraska was the third most ever last month, while Michigan had its wettest June ever.

About 67 percent of U.S. soybeans were in good or excellent condition as of July 18, down from 73 percent in the week ended June 13, USDA data show. The top ratings for corn in the 18 largest producing states fell to 72 percent this week, down from 77 percent five weeks earlier.

“Crop watchers may believe more rain is better for developing corn and soybeans, but just the opposite is true,” Martell said today in a report to clients. “Too much rain, not too little, is the problem in Midwest crops that flooded in June.”

Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, followed by soybeans at $31.8 billion, government figures show.

Jeff Wilson reporting