Profit-taking sends corn lower Tuesday
U.S. corn futures are trading lower Tuesday morning, as weather forecasts are slightly more favorable and market participants are paring risk before a government report due Wednesday.
In electronic trading, Chicago Board of Trade futures for July delivery, which are thinly traded ahead of the contract's expiration Friday, are down 10 1/2 cents, or 1.4%, at $7.64 3/4 a bushel. July futures on Monday traded as high as $7.86 3/4 a bushel, just cents away from the all-time high for a front-month contract of $7.99 3/4 a bushel.
December corn is down 14 cents, or 1.9%, at $7.16 a bushel.
Forecasts Tuesday morning suggest a slightly greater chance of rain in parched areas in the next several days. While heavier rain would be needed to substantially ease concerns, the forecasts are still making some market participants more cautious, traders said.
Futures are also being pressured by market participants taking profits and reducing risk ahead of the USDA's monthly supply-and-demand report on Wednesday at 8:30 a.m. EDT. Analysts expect the USDA to revise its forecast for the corn crop's yield, which the agency previously predicted would be a record.
However, weather concerns remain very strong and could overshadow the USDA report Wednesday if its numbers fall near expectations, said Arlan Suderman, an analyst for agricultural publication Farm Futures.
December futures on Tuesday have psychological support around the $7 a bushel level, and a drop to below those levels could trigger a further fall, Mr. Suderman said. "Everyone's nervous and if anyone happens to jump across the line we might see the whole herd go," he said.
High temperatures and a lack of rain in the last month have led analysts to cut their forecasts for the U.S. corn crop's yield. Drought conditions have spread, and temperatures were particularly high in the last two weeks, with triple-digit readings in many areas of the Midwest.
The U.S. Department of Agriculture on Monday said 40% of the country's corn crop was in good-to-excellent condition, down 8 percentage points from a week ago--and 16 percentage points from two weeks ago.
Temperatures have cooled since last week and highs mostly in the high 80s and low 90s are expected for the rest of the week in most of the Corn Belt, including Iowa, Illions, Indiana and Missouri. The forecast this week remains mostly dry for Iowa, while some rains could move through southeastern Missouri, southern Illinois and southern Indiana in the next five days.
For next week, the National Weather Service forecasts above-average temperatures in most of the Corn Belt, along with below-average chances of rain in Iowa and Minnesota, and normal chances of rain farther south and east in the Corn Belt.
-Write to Owen Fletcher at firstname.lastname@example.org
(END) Dow Jones Newswires
July 10, 2012 09:34 ET (13:34 GMT)
DJ U.S. CORN: Falling on Wetter Forecasts, Profit-Taking Before USDA Report->copyright