GRAINS-U.S. corn up 3.7 pct, soy at 11-month high as dry weather hurts crops

(Reuters) – Chicago corn rallied 3.7 percent on Monday to a one-month peak and soy rose to its highest since September as hot and dry weather in parts of the U.S. Midwest threatened to cut output.

Wheat jumped 1.5 percent to its highest in more than two weeks, buoyed by gains in corn and soybean futures.

Lack of rain and high temperatures in the U.S. grain belt could curb production of what is being estimated as a record U.S. corn crop. Soybeans are also vulnerable to dry weather as the crop is entering its key pod-filling stage.

Corn and soybeans were planted late this season due to excessively wet spring weather, leaving each crop well behind their normal maturity pace and exposed to harsh weather in August.

“The U.S. grain belt is experiencing above normal temperatures and below normal precipitation,” said Joyce Liu, investment analyst at Phillip Futures in Singapore. “This could result in lower yields than what was expected earlier.”

Chicago Board of Trade December corn jumped to $4.87-1/4 a bushel by 0306 GMT, after rising to $4.88-1/2 a bushel, its highest since July 24. November soybeans rose 3.5 percent to $13.74-1/2 a bushel.

Hot and dry weather this week in the western U.S. Midwest will put stress on developing corn and soybeans despite some recent showers, agricultural meteorologist World Weather Inc. said. U.S. corn and soybean production will fall below the government’s current forecasts but farmers can still expect a bin-busting harvest, farm advisory Pro Farmer said on Friday.

Pro Farmer projected record U.S. 2013 corn production of 13.46 billion bushels, based on a yield of 154.1 bushels per acre, using data collected during last week’s four-day Midwest crop tour, plus other market variables.

The figures compare to the U.S. agriculture department’s (USDA) latest forecast of a 13.763 billion-bushel crop with a yield of 154.4 bushels per acre.

On soybeans, Pro Farmer forecast U.S. production at 3.158 billion bushels, with an average yield of 41.8 bushels per acre – which would be the fourth-largest in history. The estimate is 3 percent below USDA’s current outlook for a crop of 3.255 billion bushels with a yield of 42.6 bushels per acre.

Large speculators trimmed their net short positions in Chicago Board of Trade corn futures in the week to Aug. 20, regulatory data released on Friday showed. The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that noncommercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and raised their net long position in soybeans. Spot-month wheat climbed to $6.44 a bushel, after touching $6.47 a bushel earlier in the day, its highest since August 8.