July 9, 2012 / 5:31 AM / 6 years ago

UPDATE 1-Dry skies threaten US corn crop as heat wave breaks

(Updates prices, adds quotes, changes date)
    NEW YORK, July 9 (Reuters) - The withering U.S. corn crop is
gaining some respite from a record heat wave this week but new
weather forecasts offered scant signs of the rainfall it
urgently needs to avoid the worst drought damage in nearly a
quarter century.
    As the majority of a near-record-size U.S. corn area is now
set to enter the key phase of pollination, a period when hot and
dry conditions can cause irrevocable damage, the lack of
moisture threatens to extend a rally that has already propelled
corn prices more than a third higher since mid-June.
    "It is dry across much of the Midwest and Plains and there
is no relief in sight," said Alan Reppert, senior meteorologist
at AccuWeather.com. He said the most affected areas were from
Iowa to Illinois, the heart of the Corn Belt.
    Chicago Board of Trade (CBOT) new-crop corn jumped 3 percent
to a contract high, leading strong gains for the grain complex
as unfavorable weather across the U.S. Midwest threatens crop
yields further. 
    Front-month corn touched a high of $7.59-3/4 a bushel
in Asian trade, not far from a record high of $7.99-3/4 set in
June 2011 and spot-month soybeans rose to $16.48-3/4 a
bushel, just below the all-time high of $16.63 notched in July
of 2008.
    "The good news for this week is that temperatures are due to
slip back from last week's record readings, the bad news is that
all of the rain forecast is for the southern third of the
nation," ABN Amro analyst Charlie Sernatinger said in a note to
    He said Nebraska and Kansas had seen some rain over the
weekend, but the eastern Corn Belt was unlikely to have any
showers until the middle of next week, according to extended
    Analysts said the forecast rain in the southern Midwest is
expected to bring only marginal relief to the crop baked in
near-record heat. 
    "It looks cooler than last week and some rain is pushing
into the region," said one Melbourne-based analyst. "The
question is how much rainfall, as of now it looks like below
average rains."
    This week's forecast for the U.S. grain belt calls for below
normal rains and above average temperatures, said one trader
citing U.S. weather forecasts. 
    "Dry weather will continue to stress crops across the
Midwest until the weekend," he said. "High temperatures will
initially be in the 80's, but quickly warm to the lower to mid
90's by the weekend."
    The latest U.S. Drought Monitor report, released on
Thursday, showed drought encompassing more of the contiguous
United States than at any other time since the report began in
January 2000.
    The blistering heat has begun to ease, however, with a
slow-moving front of cool air from Canada starting to push down
temperatures on Sunday from Minneapolis to Detroit to
    The temperature in Chicago, which had three consecutive days
of triple-digit temperatures in the past week, was a pleasant 82
degrees Fahrenheit (25 C) early Sunday afternoon, according to
the National Weather Service. 

 (Reporting by Jonathan Leff and Scott DiSavino; Additional
reporting by Naveen Thukral in Singapore; Editing by Daniel
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