Corn Futures Jump on Hot, Dry Weather in U.S.

Soaring temperatures and little rain in the Midwest of the United States has resulted in corn futures climbing to their highest levels in a month, as concerns over whether or not the harvest will be big enough to replenish corn inventories is weighing on the global market.

On Tuesday the corn futures for December jumped 29-1/2 cents to settle at $5.63-1/2 a bushel, a gain of 5.5 percent. It rose as high as $5.64 on the day, the highest level in 3 months.

Corn for December delivery has increased by 11 cents on the week so far.

The major forces driving the prices higher from an investment standpoint has been the commodity funds, which have acquired approximately 40,000 corn contracts over the last couple of days, implying they are bullish on corn at this time.

On Monday the U.S. Department of Agriculture reported the condition of corn was worst than expected, with current weather forecasts suggesting it could get worse. Meteorologists say the bad conditions could last for another couple of weeks in the region.

According to the USDA, 60 percent of the corn crop in the United States is rated from good to excellent condition. That was a drop of three percent from the prior week, and a percentage point less than expected.

With about 5 percent of the corn in the U.S. starting to silk, which means it's entering it's reproductive state, the ongoing poor weather conditions during that stage could have a major effect on yields.

The corn yield in the U.S. for 2012 was estimated to reach 166 bushels an acre by the USDA. Private projections have it at about 160 bushels an acre.