During planting, too much rain fall can make field work difficult to impossible. Late plantings can result in loss of acreage or late development which can result in a lower quality crop or lower yields. Too little rain can prevent seeds from proper germination, resulting in loss of production as well. During pollination, or the reproductive stage of crop development, excessive heat and a lack of precipitation result in poor pollination and lower pollination. Prolonged exposure to moisture can reduce quality, allow mold-based diseases to spread, as well as delay the harvesting effort due to the ground being to muddy for fieldwork.
Early frosts can damage crops as well.
Grain usage, though it ebbs and flows, is spread out throughout the year. Thus, yearly production must be rationed. Price is a function of not only current supply but perceptions of future supply as well. When future supply is perceived to be tight or limited, the futures markets tend to build a risk premium into prices, with prices tending to be higher than one would expect based on current supply and usage patterns. As future supply perceptions become more secure, the futures markets tend to remove the risk premium from prices, resulting in pricing closer to the lower level that reflects supply and usage patterns.