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Investors shoot down corn futures

04/02/2013 @ 5:01pm

U.S. corn futures extended their downturn for the third straight session Tuesday, settling at a fresh nine-month low as investors continued to shed risk in the market.

Chicago Board of Trade May corn ended down 1 3/4 cents, or 0.3%, at $6.40 1/2 a bushel.

After initially gaining Tuesday, the corn market faced a resumption of the selling pressure that consumed futures in prior sessions.




The declines weren't as severe as prior losses, but expanded on the 12.6% drop in prices in the two prior trading sessions, after the U.S. Department of Agriculture reported Thursday that U.S. corn stockpiles on March 1 were well above traders' expectations.

"The market is still coming to grips with the fact that corn supplies are not nearly as tight as the USDA had previously forecast," said Dave Marshall, commodity marketing adviser for advisory firm TCFG LLC in Nashville, Ill.

The USDA said in the report that domestic corn stockpiles reached 5.4 billion bushels as of March 1, above the average analyst forecast of 5.03 billion in a Dow Jones Newswires poll.

Managed funds, such as hedge funds, went into last week's reports with heavy bets on prices rising on tight U.S. supply forecasts. However, the USDA's report contradicted traders' expectations, forcing investors to exit bets on prices rising.

"We experienced another wave of fund liquidation Tuesday, as managed funds reduced risk amid ever-deepening losses," said John Kleist, a senior analyst with brokerage Ebottrading.com in Lakemoor, Ill.

The three-day losses erased the gains in corn futures since last June, as any bullish bet placed in the market after June 29 is still showing a loss, Mr. Marshall said.

Soybean futures ended higher Tuesday, managing to stabilize after absorbing heavy selling in recent sessions. Soybeans did not have the large build-up of bullish bets that corn had in recent weeks, allowing the market to absorb less selling than corn, Ebottrading.com's John Kleist said.

CBOT soybeans for May delivery finished up 3 1/4 cents, or 0.2%, at $13.94 a bushel.

Wheat futures finished higher, garnering strength from poor crop ratings that illustrate hard red winter wheat crops in the Great Plains are off to their worst start since 2002, Mr. Marshall said.

May wheat futures ended up 6 3/4 cents, or 1%, at $6.70 3/4 a bushel at the CBOT. Kansas City Board of Trade May wheat rose seven cents, or 1%, to $7.16 3/4 a bushel. MGEX May wheat finished up 10 1/2 cents, or 1.4%, at $7.76 1/4 a bushel.


Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
April 02, 2013 15:42 ET (19:42 GMT)
DJ UPDATE: Corn Futures Fall for Third Straight Session->copyright


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