Corn futures at the Chicago Board of Trade closed lower on Thursday on a setback amid overbought technical signals and on spillover selling from a break in soya, traders said.
Plentiful stocks of corn and routine exports also weighed on prices but selling was not aggressive due to talk that index funds may soon be buying corn futures.
CBOT corn closed 1 to 5-1/4 cents per bushel lower, with March down 5-1/4 at $2.11 per bushel.
The nine-day relative strength index for March closed at 54. Technical traders view an RSI of 70 or more as an overbought market. Technical support in the March contract was at $2.14-1/2 per bushel and resistance was at $2.19-3/4.
Exports were quiet overnight. Traders said the plentiful stocks of feed grains and persistent competition for export business from China was keeping the corn export flow at a steady yet routine level.
USDA early Friday will release its weekly export sales report and analysts expect US corn export sales last week to total between 600,000 to 800,000 tonnes, below the previous week's total of 920,600 tonnes.
Some concern was beginning to surface about the fate of crops in South America due to dryness in some areas, but most of the concern centred on the soybean market.
Meteorlogix weather on Thursday said showers in Brazil over the next several days would benefit crop growing conditions but drier and hotter weather is expected by roughly early next week. In Argentina, hotter and drier weather is causing some concern over soy and corn crop conditions, Meteorlogix said.
Cash basis bids for corn in the Midwest were steady and country movement was limited to scattered corn sales.
Oat futures closed unchanged to 2-3/4 cents per bushel lower with March down 2 at $1.95-1/2 per bushel.
Futures trading will close early Friday at 12:00 pm CST (1800 GMT), and remain closed through Monday because of the New Year's Day holiday.
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