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Favorable weather slams corn futures

07/17/2013 @ 2:32pm

U.S. corn futures fell Wednesday on a more favorable weather forecast for crops in the Midwest.

Chicago Board of Trade September corn futures settled down 6 3/4 cents, or 1.2%, at $5.38 1/2 a bushel.

Corn traders are closely monitoring weather forecasts as much of the U.S. corn crop prepares to enter its crucial pollination phase this month. Hot, dry weather during that period could damage crops and reduce the size of this fall's harvest.

Traders are particularly watching forecasts for the southwestern Corn Belt, including Nebraska, Kansas, Missouri and parts of Iowa, as dry conditions have built up in that region. Corn crops elsewhere in the U.S. are mostly in healthy condition.

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An updated European weather model on Wednesday came into closer agreement with a U.S. model to predict greater rainfall in the Midwest in the period six to 10 days from now. Forecasts also called for cooler temperatures than expected a day earlier.

The two models "converged nicely this morning," said Bill Gentry, an analyst for brokerage Risk Management Commodities in Indiana. "They're not in total agreement, but they're closer."

Updated forecasts include chances of rain for some of the dry areas of the southwestern Corn Belt, and cooler temperatures that would allow corn crops to wait longer for rain, Mr. Gentry said.

Some traders who had placed bets on higher corn prices likely sold futures Wednesday to exit those bets, concerned that forecasts could further evolve to show reduced risk for crops, analysts said.

But analysts also warned that crop conditions reported each Monday by the U.S. Department of Agriculture could further deteriorate next week. Until rain is forecast to arrive in the Corn Belt this weekend, temperatures this week are likely to remain hot, which means further stress on crops could show up in the next USDA report, analysts said.

Wheat futures were pulled lower by corn, since the two grains are substitutes in animal feed. Benchmark wheat futures remain near the middle of their trading range so far in July.

CBOT September wheat fell 4 1/2 cents, or 0.7%, to $6.65 a bushel.

Soybean futures were mixed. Nearby soybeans rose on worries about tight current supplies and strong demand from domestic processors. But deferred soybean contracts, like corn, fell on a better weather forecast to support crop development.

August soybean futures rose 2 1/4 cents, or 0.2%, to $14.77 1/2 a bushel.


Write to Owen Fletcher at owen.fletcher@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
July 17, 2013 14:40 ET (18:40 GMT)
DJ UPDATE: U.S. Corn Falls on More Favorable Weather Forecast->copyright


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