Chicago Board of Trade (CBOT) soybean futures leaped three per cent to a fresh two-month high on Friday on forecasts for hot and dry weather in the U.S. crop belt, which threatened to trim soy yields.
Corn also rose, with spot September breaking above US$5 per bushel for the first time this month on concerns of some yield reductions in the nation's corn crop as well. But most of the strength in corn and also in wheat futures stemmed from spillover buying from soaring soybeans.
Spot September soymeal rose the $20 per ton daily trading limit to $433.30 per ton (all figures US$).
"Hot weather and the dryness expected next week are on the front burner and that's what's lifting soybeans," said Mike Zuzolo, analyst at Global Commodity Analytics.
"The central and western Midwest is expected to be about 20 degrees (F) above normal for the next 10 days and that can't be good for either soybeans or corn given the lack of maturity," Zuzolo said.
Corn and soybeans were planted late this season due to excessively wet spring weather, leaving each crop well behind their normal maturity pace and vulnerable to harsh weather in August.
CBOT November soybeans closed up 41-1/4 cents per bushel at $13.28 per bushel, December corn was up 5-1/2 at $4.70, and September wheat was up 4 at $6.34-1/2.
November soy rose 5.3 per cent for the week, December corn gained 1.3 per cent and spot September wheat was up 0.6 per cent for the week.
Hot and dry weather next week in the western U.S. Midwest will put stress on developing corn and soybeans despite some showers this week, an agricultural meteorologist said on Friday.
"There were rains yesterday and some more showers today into Saturday for a fair amount of the western Corn Belt. That will help buy crops come time before more stress moves in," said Andy Karst, meteorologist at World Weather Inc.
Karst said temperatures would begin to rise by the weekend and soar to the mid- to upper 90s F in the western Midwest and the mid-80s F to low 90s F elsewhere.
"We'll see a ramping up of crop stress in dry areas of the Midwest especially in the west," he said.
The soybean crop is in its pod-setting stage of development and hot weather now can cause the pods to either not form soybean seeds or to abort seeds, trimming yield prospects.
"August is the make-or-break month for soybeans and if you drop the yield just one bushel per acre that gets carryout down to a low 145 million," said Don Roose, analyst and president of U.S. Commodities, Des Moines, Iowa.
"And if you drop it two bushels, the carryout gets below pipeline needs."
The U.S. Department of Agriculture (USDA) in its August crop report forecast 2013 U.S. soybean production at 3.255 billion bushels and yield per acre at 42.6 bushels.
USDA forecast the soybean ending stocks or carryout by the end of next summer (2013-14 marketing year) at 220 million bushels, above this summer's expected carryout of 125 million.
Heat countering Pro Farmer tour estimates
After the close of U.S. trading on Friday Pro Farmer pegged 2013 U.S. corn production at a record high 13.46 billion bushels but below the U.S. Department of Agriculture's (USDA) August outlook for 13.763 billion. Pro Farmer pegged the U.S. soybean crop at 3.158 billion bushels, below USDA's August outlook for 3.255 billion.
"I think their numbers are pretty neutral because we've all been dialing in losses because of the declining conditions and the impact of heat and dryness in August," said Shawn McCambridge, analyst for Prudential Bache.
"The numbers are under where USDA is but that shouldn't be surprising with the weather we're having," he said.
Late plantings led Pro Farmer to slash expectations for the amount of U.S. corn to be harvested this autumn by nearly two million acres and soybeans by nearly a million acres.
"They took 1.8 million harvested acres of corn off of Iowa, Minnesota and North Dakota and that number does stand out. It's a big number so harvested area is really up for debate," McCambridge said.
McCambridge said there was nothing bearish for corn or soybean futures prices in the Pro Farmer forecast and expected the open of Globex trade Sunday night to be volatile and was looking for higher prices, unless weather forecasts change over the weekend to wetter and cooler outlooks for the Midwest.
"If current forecasts hold, I see corn up three to seven cents per bushel at least Sunday night and soybeans, which are the most vulnerable to harm, up another 10 to 20 cents per bushel," McCambridge said.
-- Sam Nelson is a Reuters correspondent covering grain and oilseed futures markets in Chicago.