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Grain markets fall on profit-taking

01/17/2013 @ 4:36pm

U.S. grain and soybean futures fell Thursday, pressured by profit-taking after recent gains.

Chicago Board of Trade March corn futures settled down 6 3/4 cents, or 0.9%, at $7.24 1/2 a bushel.

"The unifying theme is probably profit-taking, especially in corn," said Doug Houghton, an analyst at Brock Associates, a commodity advisory firm in Milwaukee. After eight straight sessions of higher prices for March corn, "it's due for some type of downward correction," he said.

Corn, wheat and soybean prices rose earlier this week, with corn and wheat benefiting from expectations for strong domestic demand for the two grains as use in animal feed. Soybeans and corn have also been helped by concerns about drier weather forecasts for crops in Argentina.

But traders on Thursday took advantage of the rally to sell futures, sending prices lower. Traders also said the South American weather concerns were already priced into the market and that the weather might improve in Argentina late next week.

Updated long-term weather forecasts released Thursday by the National Oceanic and Atmospheric Administration added to pressure for corn and soybeans. The administration's forecast for March, April and May predicted above-average chances of rain in much of the Midwest, including most of Minnesota, Iowa, Illinois and Indiana. Rain at that time would be beneficial for U.S. crops early in their growing season.

Corn also fell on technical pressure. March corn futures failed to surpass a downward-sloping trendline drawn off the contract's peak levels reached in the summer and fall, a negative technical signal. March corn in the afternoon settled below its 50-day moving average of $7.25 a bushel, another negative signal that could fuel further selling.

Corn was also pressured by weak demand for the grain from ethanol producers and foreign buyers. Data from the U.S. Energy Information Administration on Wednesday showed the country's ethanol production last week fell to the lowest level since the EIA began releasing the weekly data in mid-2010.

Soybeans drew extra pressure from concerns that the start of the South American soy harvest in coming weeks will raise competition and reduce sales for U.S. soybean exports.

"The market knows the U.S. export window could slam shut pretty quickly," Mr. Houghton said.

CBOT March wheat fell 3 3/4 cents, or 0.5%, to $7.81 1/4 a bushel. KCBT March wheat fell 5 1/2 cents, or 0.7%, to $8.37 a bushel. MGEX March wheat fell 2 1/4 cents, or 0.3%, to $8.69 1/4 a bushel.

March soybeans fell 6 1/4 cents, or 0.4%, to $14.30 1/4 a bushel.

Write to Owen Fletcher at owen.fletcher@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

January 17, 2013 15:37 ET (20:37 GMT)

DJ UPDATE: U.S. Grain, Soybean Futures Fall on Profit-Taking->copyright

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