Rains sink corn futures Monday
U.S. corn futures closed lower Monday, pressured by rains benefiting U.S. crops and positioning ahead of government reports due Tuesday.
Chicago Board of Trade futures for July delivery closed down 6 cents at $5.92 a bushel. December corn fell 10 cents to $5.34 a bushel.
Futures were pressured by rains moving across the corn belt covering more ground than expected. The rains moved through Iowa and Illinois overnight and during the day Monday.
"The forecast I was seeing was kind of talking about those storms diminishing as they moved further east, but you've got a fairly well-developed line of storms there now," said Marty Foreman, analyst at Doane Advisory Services, an agricultural advisory firm in St. Louis. "It looks a little better than what I had envisioned."
The National Weather Service's six-to-10-day outlook forecasts above-average chances of rain in key corn-growing states including Minnesota, Iowa and Illinois, raising the prospect of further moisture to recharge dry soil.
Concerns about dry, hot weather reducing the yield of U.S. corn crops had boosted futures last week.
Corn futures also fell because some market participants were likely selling futures to exit long positions, aiming to reduce risk ahead of key government crop reports due Tuesday, traders said.
Traders expect the U.S. Department of Agriculture, in a supply-and-demand report due Tuesday at 8:30 a.m. EDT, to keep a high forecast for domestic corn stocks at the end of the next marketing year.
Analysts on average expect the government to forecast corn inventories at the end of the next marketing year at 1.740 billion bushels, down 7.5% from its previous forecast of 1.881 billion bushels but still up sharply from expected levels this year, according to a Dow Jones poll. The USDA last month forecast record U.S. corn production this year.
Still, the expected drop in the USDA forecast for 2012-13 ending stocks was already mostly priced into futures, traders said.
Soybean futures also ended slightly lower Monday, pressured by the same rains as corn, as the corn belt is also a key soy production region. Some liquidation of long positions may also have pressured futures, traders said.
July soybeans fell 1 1/2 cents to $14.24 3/4 a bushel.
Wheat futures gave up gains from earlier in the session to close mixed, pressured by the drop in corn prices. Concerns about dry weather in Russian wheat regions, and short-covering ahead of the USDA reports, prevented further losses.
CBOT July wheat rose 1/4 cent to $6.30 1/2 a bushel. Kansas City Board of Trade July wheat fell 3 cents to $6.53 a bushel, and MGEX July wheat rose 6 3/4 cents to $7.76 a bushel.
Agricultural commodities also came under some pressure during the session as optimism faded about a bailout for troubled Spanish banks, and the dollar recouped losses made earlier in the day.