Chicago Board of Trade corn for September delivery closed up 17 1/4 cents, or 2.2%, at $7.98 1/2 a bushel, and August soybean futures settled up 28 1/2 cents, or 1.7%, at $16.84 1/4.
"A lot of uncertainty still surrounds U.S. crops, and with weather forecasts not providing any significant relief for drought-stressed corn and soybeans, investors added risk to prices," said Shawn McCambridge, senior grains analyst with Jefferies Bache in Chicago.
Corn and soybean futures, which surged to all-time highs last week amid the record-setting U.S. drought, had fallen under pressure this week as rain showers passed through parts of the Midwest. The showers suggested crops could recover some of their yield potential after weeks of blistering heat and a dearth of rainfall in much of the central U.S.
Soybeans were particularly hard hit, as the rains came during the crop's key growth stage, which occurs in late July and August.
However, many analysts said the rains were disappointing, and with weather expected to return to a warmer and drier pattern next week, crops remain under stress.
The areas that needed rains this week received the least amount, and the trend for the Midwest in general is a drier period, with higher-than-normal temperatures next week, said Joel Burgio, meteorologist with private forecaster Telvent DTN Weather in Boston.
"It looks like the overall drought will continue," Mr. Burgio said.
There's still significant concern among market watchers that crops are getting smaller, Mr. McCambridge said. He noted that private forecasters continue to prune their estimates for the size of autumn harvests, as heat and dryness reduce yield potential.
Traders said private forecasters Informa Economics and Lanworth are the latest to cut their outlook for 2012 U.S. corn and soybean harvests. Informa estimates corn and soy yields slumping to 134 and 38.5 bushels an acre, respectively. Lanworth forecasts corn and soy yields at 122 and 35.7, respectively, traders said Friday.
Meanwhile, analysts from St. Louis-based Doane Advisory Services pegged Iowa corn yields at 117 bushels an acre, down from 175 a year ago, based on observations from a tour of fields. Doane sees an Iowa soybean yield of 39 bushels an acre, down from 50.5 a year ago.
"Field after field, bad or worse," Doane's Bill Nelson said of Iowa's crops. Though Iowa, the nation's top corn producer, hasn't been spared the drought, most analysts think it is better off than the corn crops in Illinois and Indiana.
The U.S. Department of Agriculture in July estimated the U.S. corn yield at 146 bushels an acre and soybean yield at 40.5 bushels an acre. The USDA is scheduled to release updated estimates Aug. 10.
Disappointing rainfall in the Midwest this week along with forecasts for hotter weather next week boosted both front-month corn and soybean futures by about 2% Friday.
