Corn and soybeans deteriorated far more significantly than the market had expected as damage from the heatwave spread into northern areas where producers had held out hopes of decent harvests.

The proportion of US corn rated in "good" or "excellent" health fell by eight points to 48% in the week to Sunday, the US Department of Agriculture said.

The figure was above the five-point decline that investors had expected, and compared with a 69% reading a year ago.

For soybeans, the proportion seen good or excellent tumbled by eight points to 45%, again more than investors had expected, and below a year-before rating of 66%.

'Yields are in jeopardy'

The decline reflected more of the hot and dry weather which left most Midwest corn farms with a moisture deficit of two-to-three inches in June alone, according to Gail Martell at Martell Crop Projections.

At Phillip Futures, Ker Chung Yang noted that last weekend "there was also wind and hail damage in parts of the eastern Corn Belt".

And, indeed, crop condition continued to suffer in states such as Illinois, where the percentage of corn rated good or excellent dropped 11 points to 26% over the week, and Indiana, where the decline was of eight points to 19% - the worst reading since the drought year of 1988.

"Several areas of the state [Indiana] experienced record-setting heat during the week with temperatures reaching as high as 107 degrees Fahrenheit in some southern counties," USDA officials said.

'Signs of stress'

However, the decline was also evident this time in more northerly states where crops had escaped largely unscathed until now.

Wisconsin corn dropped 10 points its good or excellent rating over the week, and soybeans 11 points.

In North Dakota, where crops suffered a similar ratings decline," a heatwave last week resulted in stress on crops and waning soil moisture supplies", the department said.

'Less-than-ideal growing conditions'

With northern US a major area for producing small grains, the impact of the weather was evident in national ratings of crops such as barley and spring wheat, which saw the end of a trend of improving condition.

Spring wheat was rated 71% good or excellent, down six points on the week, and only one point better than a year ago.

"A few pockets of less-than-ideal growing conditions are beginning to show on the weekly crop progress data," Brian Henry at Benson Quinn Commodities said.

Even in Minnesota, a state where corn and soybeans have held on to good condition, the spring wheat rating fell by eight points to 66% good or excellent.

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