CBOT July corn climbed 20 cents, or 3%, to $6.92 1/2 a bushel, and December corn ended up 21 cents, or 3.3%, to $6.55 3/4.
Traders are factoring in the risk of yield losses, as the hot, dry weather forecasts for the Midwest are seen as a detriment to corn yield potential.
The hot, dry weather couldn't come at a worse time for corn crops moving through their critical pollination stage of development, said Teucrium Trading's Sal Gilbertie.
The pollination stage is when moisture has its greatest effect on yields. Pollination determines the number of kernels each ear of corn produces, and damage at this stage is irreversible.
Yet, despite the December contract setting a nearly 10-month high, the inability of futures to expand early gains sparked fears that the market has adequately priced in crop threats.
"Considering corn rallied 40 cents last Monday, but we could not match that momentum today, may be a sign that weather is priced in already," said Chad Henderson, president of brokerage and agricultural advisory firm Prime Ag Consultants.
Traders are also mindful of prices rising to levels that cause demand destruction, particularly with the ethanol industry and livestock feeders reporting poor profit margins from higher corn prices.
Separately, soybean futures gained support from uncertainties surrounding the coming crop as well. Crops in the eastern and southern Midwest are under stress from heat and dryness, analysts said. The soybean market also drew support from a large, one million ton sale of U.S. soybeans to unknown destinations for delivery in the 2012-13 marketing year that begins Sept. 1.
Wheat futures followed the lead of corn, adding strength with the possibility of dry weather conditions threatening crops in the Black Sea area, northern China and Australia.
CBOT July soybeans rose 19 1/2 cents, or 1.3%, to $15.32 1/4 a bushel, and November soybeans ended up 10 1/4 cents, or 0.7%, at $14.38. CBOT September wheat rose 15 1/4 cents, or 2%, to $7.72 1/2, September KCBT Wheat climbed 21 cents, or 2.8%, to $7.77, and MGEX September wheat settled up 18 1/4 cents, or 2.2%, at $8.62 3/4.
Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
