Corn bulls received a double boost as Strategie Grains, slashing its forecast for the European Union harvest, flagged "further significant potential" for prices rises, while a unit of Cargill highlighted the need to ration further demand for the grain.
The influential analysis group raised its estimate for the EU wheat harvest by 1.9m tonnes to 133.3m tonnes, including durum, citing higher-than-expected yields from early harvests in France, Germany and Poland.
However, the forecast for overall grains harvest was cut by 3.9m tonnes, reflecting a downgrade of 7.1m tonnes to the forecast for the region's corn crop, tightening by a further notch the squeeze on world supplies.
A dearth of rainfall and high temperatures during pollination - as in the US - had cut prospects for, in particular, Hungarian, Italian and Romanian crops, with Bulgarian and Czech crops also downgraded.
'Damage is irreversible'
"Corn development has been severely impacted by the hot, dry weather in central and southern Europe," the French-based analysis group said.
"The damage is irreversible, although an improvement in the weather would provide better conditions for filling the grains that exist."
The downgrade left the group's estimate for the EU corn crop at 58.1m tonnes, representing a 12.5% drop year on year.
The figure is also lower than the 61.5m tonnes to which the US Department of Agriculture on Friday reduced its own estimate, warning that "yield prospects have fallen sharply due to an extremely hot and dry summer in Europe's southern corn area".
'Significant demand rationing needed'
The USDA revision came as it extended to 100m tonnes, to 849m tonnes, its cut in two months to world corn production hopes in 2012-13, reflecting mainly worsened prospects for the drought-hit US crop, but also setbacks in Europe and Ukraine.
The outlook of tight supplies has fuelled a jump in prices, as measured by Chicago corn futures, to record highs last week.
Strategie Grains said that "despite having risen sharply during the last two months, corn prices have a further significant potential to increase".
Separately, AWB, the Australian grain handler owned by Cargill, also implied that conditions were ripe for further rises in corn prices, flagging the need for buyers compete for tightened supplies.
"Fundamentally corn remains in an environment where a significant amount of demand rationing needs to occur, and most in the market believe this has not yet been achieved at today's values," AWB's Richard Williams said.
The support for corn bull constrasts with comments from a cut to "neutral" by Societe Generale earlier this week in its outlook on the grain's prices, with Australia & New Zealand Bank cautioning over further increases.