Corn prices jumped 4.9% as forecasts for more hot, dry weather renewed concerns that a drought in the Midwest is taking a heavy toll on the nation's corn crop.
Corn futures surged in recent weeks as expectations fell for a corn harvest that was once expected to set a record. In a monthly supply-and-demand report last week, the U.S. Department of Agriculture pared its estimate for this fall's corn yield by a higher-than-expected 12% from its forecast last month, to 146 bushels an acre. The proportion of the U.S. corn crop in "good" or "excellent" condition as of Sunday fell nine percentage points from a week earlier to just 31%, logging another week of the worst conditions since 1988, a USDA crop report showed after grain markets closed.
Corn futures for September delivery rose 36.25 cents—nearly the 40-cent limit imposed by the exchange—to $7.7675 a bushel at the Chicago Board of Trade. The front-month contract is up 41% since bottoming out in early June and is just 23 cents from the nominal record of $7.9975 a bushel reached in June 2011.
The drought is hitting a wide swath of the corn belt, including Iowa and Illinois, the two largest corn-producing states.
Corn prices could set a new record in the next two to three weeks if the hot, dry weather continues, said Doug Bergman, a Chicago-based analyst with RCM Asset Management.
Monday July 16, 2012/ The Wall Street Journal.