By Benjamin Parkin

Grain and soybean futures rallied on Tuesday as hot Midwestern weather took a toll on growing crops.

Corn futures for September delivery rose 1.3% to $3.46 1/4 a bushel at the Chicago Board of Trade. August-dated soybean contracts rose 1.2% to $8.39 1/2 a bushel, while September wheat gained 1.9% to $4.97 3/4 a bushel.

The U.S. Department of Agriculture said on Monday after markets closed that the quality of this year's growing corn and soybeans deteriorated last week, after a bout of searing hot temperatures stressed the crops.

The data was a sign that a months-long spell of near-impeccable growing conditions seemed to be coming to an end.

"Crop ratings remain above average for this time of year, but they are rapidly moving toward average," said Arlan Suderman, chief commodities economist at INTL FCStone.

The USDA said 72% of corn was in good-or-excellent condition, down 3% from a week earlier. The reduction, which was larger than expected, was led by deterioration in states like Missouri and Michigan. The share of soybeans rated good or excellent, meanwhile, fell 2% to 69%.

The ratings helped spark buying interest when markets reopened, as traders bet that production this season might not be as high as previously expected. Given ongoing concerns about what trade disputes with China, Mexico and others will do to demand, the prospect of a bumper harvest later this year has pressured prices.

Prices for corn and soybeans have fallen sharply in recent weeks. As of last week, soybeans were down over 20% from late May, trading at the lowest point in nearly 10 years, while corn had also lost around a fifth over a similar period.

The wheat market has fared better recently, in part because major producers like Russia have struggled with dry growing conditions and a disappointing crop.

Mild temperatures and rains are due in the Midwest this week, said the Commodity Weather Group, before that moisture shifts south. The cooler and wetter weather is expected to relieve some of the recent stress on this year's crops.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

July 17, 2018 15:00 ET (19:00 GMT)

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