Feb. 22 (Bloomberg) -- Corn rose to a 10-year high in Chicago and soybeans extended this year's rally to 15 percent as wet weather threatens to prevent U.S. farmers from planting enough to meet surging demand for crop-based fuels.

Above-normal rains are forecast in March and April from St. Louis to Columbus, Ohio, when most Midwest fields are planted, said Joe Widenor, a meteorologist at CropCast Services Inc. in Rockville, Maryland. Wet fields during planting can reduce the number of viable plants. Corn has jumped 92 percent in the past year and soybeans are the highest since June 2004.

``Production risks are growing and prices will rise,'' said Terry Jones, vice president for Russell Consulting Group in Williamsburg, Iowa, who farms 5,000 acres of corn and soybeans. ``The market has finally concerned itself that these are unusual demand circumstances that will require good growing weather.''

Corn futures for May delivery rose 8.5 cents, or 1.9 percent, to $4.475 a bushel on the Chicago Board of Trade, after reaching $4.47, the highest for a most-active contract since June 1996. Prices have surged as record ethanol production and rising demand for livestock feed reduced world inventories for a sixth time in seven years.

Soybean futures for May delivery rose 2.5 cents, or 0.3 percent, to $8.005 a bushel in Chicago, the first close above $8 since June 2004. Prices have jumped 46 percent in the past five months on speculation that increased returns from growing corn will cut U.S. plantings of soybeans.

Planting Forecasts

U.S. farmers, the world's biggest producers and exporters of both crops, probably will plant 90.14 million acres of corn this spring, up 15 percent from 78.33 million last year, to profit from a rally in prices, Cedar Falls, Iowa-based Professional Farmers of America said in a newsletter Feb. 2 after surveying farmer clients.

Some 66.9 million acres of soybeans will be planted, down 11 percent from 75.52 million last year, the group said.

The U.S. Department of Agriculture said last week that corn seeding will rise 8.9 percent to 86 million acres this year, based on estimates from December. The department will release an updated forecast on March 1 at the annual agricultural outlook forum in Washington.

``Prices will go high enough to attract more farmers to shift to corn,'' said Jones, who forecasts planting of 86 million acres because of the increased costs of producing, harvesting and storing corn relative to soybeans. ``The next 1 million acres will cost more and yield less,'' because fields are less productive when planted in successive years, he said.

La Nina Pattern

Prices have risen almost 4 percent in the past week on speculation a La Nina weather pattern will cause hot, dry conditions from June to August and crop damage in the U.S., the largest exporter of corn.

A La Nina system will begin in April and continue through the rest of the year, affecting the central U.S., World Weather Inc., a private forecaster in Kansas City, Kansas, said on Feb. 16, citing a National Oceanic and Atmospheric Administration forecast. NOAA's model shifted last week, showing the conditions may damage crops, World Weather said.

Most Midwest soil temperatures at 8 inches are below freezing according to data from the National Oceanic and Atmospheric Administration Web site. Soil moisture will be as much as 40 millimeters above normal from Missouri to New York at the end of March, the Climate Prediction Center said Feb. 19.

Weather Outlook

Warm, dry weather has helped farmers sow the three largest plant populations in record time during the past three years, data from the USDA show. Early planting in warm, dry soils increases yield potential.

``Soil temperatures are cold and with wet soils, you will be slower to warm up and dry out for planting,'' said Dale Durchholz, a market analyst for AgriVisor Services Inc. in Bloomington, Illinois. ``The anxiety level about planting the crop is rising.''

Buying also accelerated as commodity funds and hedge funds increased purchases when contracts yesterday rose to new highs, Durchholz said. Open interest in corn futures yesterday rose by 16,742 contracts to a record 1.541 million. Soybean open interest rose by 9,734 contracts to a record 506,528.

UBS AG, the world's biggest money manager, forecast ``rapidly'' rising investments in the coming year tracking its commodity index, which began last month.

New Buying

The UBS Bloomberg Constant Maturity Commodity Index, or CMCI, is made up of 28 commodity futures including corn and soybeans and is based on a strategy that allows investors to choose different maturities for each contract, according to David O'Donoghue, executive director of risk management products at the Zurich-based bank.

``It's all a money game right now where new high prices attract new buying,'' Durchholz said. ``The new highs this week opens the door for a test of the all-time highs'' with any weather problems this year, Durchholz said.

July corn futures rose to a record $5.545 on July 12, 1996. The price of the December contract rose to $4.295 today, a record for delivery in that month. The highest soybean futures traded was $12.90 in the July contract on June 5, 1973. November soybeans, which rose 5.75 cents to $8.3775 bushel today, rose to a record for that month $10.46 on June 23, 1988.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.

To contact the reporters on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net.

Last Updated: February 22, 2007 15:33 EST