Crop prices closed higher Thursday after the Department of Agriculture cut its forecast for the size of this year's harvest.
The USDA said hot weather stunted corn crops throughout the Midwest, dragging the yield of each acre down about 4 percent. That means grain supplies could be tight through 2012, keeping prices up.
Corn for December delivery rose 25.5 cents to settle at $7.14 per bushel. Wheat for September delivery rose 16.25 cents to finish at $7.0125 per bushel. November soybeans added 30.25 cents to finish at $13.325 per bushel.
Tight supplies of corn and soybeans have driven prices up this year, with corn trading at almost twice the level of last summer.
The USDA said the current surplus is larger than it thought, but the smaller harvest could cut into those reserves through 2012. World demand is expected to fall somewhat because of the high prices, but demand has outpaced supplies over the last decade and stripped down the surpluses.
That means traders are keeping a close eye on weather reports this summer. Every bushel lost from this year's crop could push prices higher, said Jason Ward, an analyst with Northstar Commodity in Minneapolis.
"We need to see some rain," Ward said. "The market is going to have to price in additional production declines if we do not see rain."
Gold prices fell as investors moved their money back into stocks during a broad market rally Thursday. The Dow Jones industrial average rose about 4 percent. The S&P 500 and the Nasdaq were more than 4.5 percent higher.
Gold was also hurt as the CME Group trading exchange raised its margins requirements for gold contracts. The move requires investors to back up their best on the gold market with more cash.
Gold for December delivery fell $32.80 to $1,751.50 an ounce. September silver lost 65.8 cents to end at $38.669 an ounce.
Industrial metals were up along with the stock market. Rising stocks increased confidence that demand will strengthen in the world's factories for the raw minerals to make products.
September palladium rose $7 to $733.80. Copper for September delivery gained 12 cents at $4.0085 per pound.
October platinum added $20.70 to end at $1,792.40.
In energy trading, oil was also higher, as encouraging news about the jobs market and the stock market rally signaled stronger demand.
Benchmark crude for September delivery gained $2.83 to finish at $85.72 per barrel on the New York Mercantile Exchange.
Heating oil gained 3.39 cents at $2.8992 per gallon. Gasoline futures rose 4.48 cents to $2.8273 per gallon and natural gas added 10.5 cents to end at $4.108 per 1,000 cubic feet.