Corn prices extended their rally, helping shares in fertilizer groups too, as dryness damage to the US crop, and the prospect of further adverse weather, sparked investors to slash yet more from yield estimates.
Chicago's best traded December corn contract, soared 4.8% to close at $6.24 a bushel, taking gains so far this week above 12%.
The continued headway was fuelled by further downgrades to expectations that the US crop yield may fall towards last year's disappointing level of 147.2 bushels per acre – well below the record 166.0 bushels per acre the US Department of Agriculture has pencilled in.
A USDA report overnight cut by seven points, to 56%, the proportion of the US corn crop in "good" or "excellent" condition, a larger figure than expected and one of the worst readings on record for the time of year.
Meanwhile, the latest run of weather models reduced hopes for a spell of rain next weekend, if cutting temperature forecasts too.
The corn crop is entering the sensitive pollination period when hot and dry weather is particularly deleterious.
Lower and lower
"With the earliest planted corn already into pollination, kernel development is sure to be impacted by continued dry ness and temperatures in the high 90s degrees Fahrenheit and above 100 degrees in areas of the Midwest," FCStone commodity risk manager Jaime Nolan Miralles said.
"166 bushels per acre says the USDA, 155 bushels per acre said the market last week, sub-150 bushels per acre is what many are calling for now."
The University of Illinois said that "based on upcoming weather conditions, there is a risk that the average yield will fall below" 150 bushels per acre.
For pricing, levels of about 150 bushels an acre have emerged as a sensitive point, with a lower yield signalling that higher US sowings this year will not be sufficient to loosen up supplies significantly and, according to University of Illinois academics, require "higher prices to ration the crop".
On Monday, Macquarie said a "bearish call" on corn prices ahead "would be intact" provided the yield topped 151 bushels an acre.
Corn's revival continued to feed into share markets too, extending a rally in fertilizer prices, on ideas of a boost to sales.
The level that corn futures trade at is viewed as a key indicator as to the prices that fertilizer companies can charge.
Fertilizer company share prices, gain on day and (so far this week)
Agrium: Can$89.56, +1.9%, (+3.1%)
CF Industries: $188.93, +2.9%, (+6.3%)
Mosaic: $53.31, +4.3%, (+5.4%)
PotashCorp: Can$43.56, +3.4%, (+5.3%)
Yara International: NOK249.40, +5.8%, (+8.0%)
On Monday, Dahlman Rose upgraded to "attractive" from "cautious" its rating on fertilizer groups, flagging the "scenario of a [US corn] crop reduced by weather issues".
"The probability of hitting the current USDA estimate of 166 bushels per acre has been reduced while the probability of lower yields has increased," the broker said, itself estimating a yield of 160 bushels per acre.