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Corn futures sag to 3-month lows

04/18/2012 @ 4:24pm

Nearby U.S. corn futures dropped to a three-month low, pressured by expectations for farmers to harvest a large U.S. crop earlier than usual this fall.

Corn for May delivery at the Chicago Board of Trade closed down 15 cents, or 2.4%, at $6.01 3/4 a bushel, the lowest settlement for the front-month contract since Jan. 18. December corn fell 1 cent to $5.28 3/4 a bushel.

Corn futures have struggled since the U.S. Department of Agriculture last week left its domestic corn stockpile projection for the end of the marketing year unchanged, despite expectations for a cut. That led traders to shift their focus from tight on-hand supplies to forecasts for a large U.S. crop this year--and for it to be harvested early, easing demand on tight supplies of corn harvested last year and being kept in storage.

A new USDA report on Tuesday added to expectations for an early harvest. The USDA said 17% of the U.S. corn crop was seeded as of Sunday, up 10 percentage points from a week earlier. The pace exceeded last year's average as well as the five-year average of 5%.

"We're going to have a lot more corn harvested in August than normal," said Rich Feltes, vice president of research for R.J. O'Brien.

The fast pace of planting pressured May and July corn futures most. Longer-term futures fell only slightly, as managed funds appeared to be exiting "spread" positions they had taken, betting nearby corn futures would rise more than deferred futures, traders said.

"All the speculators have been buying the July [corn futures] and selling the December, and they're blowing out of it today," said Sid Love, an analyst with Kropf and Love Consulting in Overland Park, Kan.

Strong cash markets have supported nearby corn futures in recent months. Farmers have been demanding higher prices for their on-hand corn, raising concerns about tight current supplies.

Those concerns still underpin corn prices, preventing a sharper drop, and the fall in prices could spark buying interest again, analysts said.

The fall in corn weighed on wheat futures, with CBOT May wheat also closing at a three-month low. Healthy conditions for the U.S. winter wheat crop and fast planting of the spring wheat crop also pressured prices.

CBOT May wheat ended down 4 3/4 cents at $6.10 3/4 a bushel. Kansas City Board of Trade May wheat fell 6 cents to $6.26 a bushel, and MGEX May wheat fell 8 1/2 cents to $8.00 a bushel.

Soybeans also fell, as traders worried that managed funds having built up a large number of long positions in soybeans could leave the market vulnerable to a drop. Traders also expect U.S. soybean acreage to expand beyond current government forecasts, easing worries that soy supplies could tighten.

CBOT May soybeans fell 18 cents, or 1.3%, to $14.07 3/4 a bushel.

-By Owen Fletcher, Dow Jones Newswires; 312-750-4120; owen.fletcher@dowjones.com
(END) Dow Jones Newswires
April 18, 2012 16:02 ET (20:02 GMT)
DJ US GRAIN AND SOY REVIEW: Corn Futures Fall To 3-Month Low->copyright

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