Corn prices rose to record highs on Monday and looked set to climb further as torrential rains threatened to reduce further US crop prospects in a market already facing tight supplies and surging demand.

The lead July 2008 corn futures contract rose as high as $6.73 per bushel, up more than 3 percent and a record for a spot contract. It closed on Friday at $6.50-3/4 while the July 2009 contract scaled an all-time peak of $7.20.

"We've got some rain in the United States that could reduce some of the plantings and yields for corn. Combine that with the drive into ethanol and you can see why corn is going to spike up," said analyst David Hart of Fat Prophets.

Strong demand for corn from US biofuel producers has contributed to supply tightness in the corn market. The US Department of Agriculture has forecast about a third of this year's crop will be consumed by the biofuel sector.

"I am still very bullish. I think $7, $8, $9 corn is well within reach," said Commerzbank analyst Edward Hands. "The mandated biofuel side continues to weigh heavily on the corn balance sheet and the plantings this year seem to be very late," he added.

Nobuyuki Chino, president of Unipac Grain Ltd in Tokyo, said any drop in area and yields could lead to a further decline in already low stock levels. "It is a very fragile market, and we are now standing at a very crucial point in time," he said.

Others agreed that corn was headed higher. "I think the widely held view is that (corn) will be rising another notch towards the summer," said Kenji Kobayashi, a grains analyst at Tokyo's Kanetsu Asset Management.

Soybean, wheat and rice prices also rose sharply on Monday. July 2008 soybean futures on the Chicago Board of Trade rose to a peak of $14.89-1/2 a bushel, up 32 cents and the highest level for the contract since early March.-Reuters