MAIZE and soybeans in the US Midwest baked in an unrelenting heat wave on Monday, stoking fear of big crop losses that will boost food and fuel prices, and cut exports and aid from the world's top shipper of the key crops.

The condition of the nation's maize and soybeans as of Sunday deteriorated even more than grain traders had feared, and the US agriculture department cut its weekly maize crop condition rating by the biggest amount in nearly a decade.

After weeks of drought some lucky farms have been doused by scattered thunderstorms in the past few days. But weather forecasters warned the heat and dryness would only intensify until the end of July and possibly beyond.

"We're moving from a crisis to a horror story," Purdue University agronomist Tony Vyn said. "I see an increasing number of fields that will produce zero grain."

The drought scorching the US Midwest is the worst since 1956, the National Oceanic and Atmospheric Administration said in a report posted on its website on Monday. Drought is affecting 55% of the land mass in the lower 48 states.

The maize crop is in the greatest danger. Plants are trying to pollinate to let ears fill with kernels, a period when adequate moisture is vital for final yields. The US ships more than half of all world exports of maize, which is made into dozens of products, from starch and ethanol to livestock feed.

The US agriculture department on Monday rated the maize crop - which had once been estimated to total a record 14-billion bushels this year - at only 31% good-to-excellent, down nine percentage points on last week.

The soybean crop rating was cut to 34% good-to-excellent, down six percentage points from the previous week.

Chicago Board of Trade maize for December delivery has soared 54% since mid-June, reaching a contract high of $7,78 on Monday and approaching its record price near $8.

Soybeans for November delivery soared to a new contract high of $15,97 before slipping back a few cents.

Crop watchers were alarmed that maize rated poor-to-very poor jumped to 38%, versus 30% last week and 11% a year ago.

"They're moving maize from good-and-excellent condition to poor-to-very poor in one week, which skips fair condition. What they're saying is it's a lot worse than they thought," said farmer Larry Winger, who farms along the Illinois-Indiana border, commenting on the agriculture department report.

To make matters worse, Mr Winger said, drought has created ripe conditions for spider mites, which suck the moisture out of soybeans and can slice yields in half. Japanese beetles and other pests were feeding on Midwest maize, which can also develop toxic fungal diseases in drought years, analysts said.

Both grains are exported around the world, raising concern about global food shortages and inflation. In the US, the impact on grocery and meat case prices may take time to be felt but will likely be seen in inflation in coming months.

DISASTER AREA

Last week, US Agriculture Secretary Tom Vilsack designated more than 1000 counties across the country as natural disaster areas due to the drought conditions, the largest single designation in the history of the US agriculture department loan aid programme.

In Nebraska, where most farmers irrigate their maize, flows in streams and rivers had dropped so much that the state on Monday asked 1100 of Nebraska's 48000 farmers and ranchers to stop pulling water from the waterways and use wells instead.

Iowa and Illinois produce a third of US maize and soybeans. But prospects there have turned down sharply, raising fear that losses will be the worst since 1988, the last major drought.

Prospects for the later-developing Midwest soybean crop were better than for maize, though substantial rains were needed during the next three weeks to salvage Indiana's crop, Mr Vyn said.

"The window for soybeans is closing," he said.

Soybeans usually go through their key growth period of flowering and pod-setting in August, a few weeks after maize in the Midwest. Soy is used in scores of products, from paints and feeds to edible oils and increasingly for soy-based diesel fuel.

"We need soaking rains now. We need 51mm to 76,2mm and that's not in the forecast," AgResource Co analyst Dan Basse said.

AccuWeather meteorologist Erik Pindrock said a seemingly immovable ridge of high pressure on Monday kept much of the central maize belt in a dome of heat, and he predicted the hot, dry weather would persist throughout July and possibly into August.

Monday's heat matched high temperature records for the date in many locations including Flint, Michigan, where it was 37°C, and in Indianapolis, where it was 36,6°C, he said.

"We've seen Raleigh, North Carolina, tie its all-time record of 40.5°C degrees three times . so this is definitely a countrywide heat wave," Mr Pindrock said.

Reuters