Corn futures at the Chicago Board of Trade ended down on Thursday amid an abundant supply of feed grains and concerns about reduced consumption of corn as bird flu spreads across the globe, traders said.
Fund selling, estimated at 5,000 lots, led the way down, they said.
CBOT corn closed 1/2 to 3-1/4 cents per bushel lower, with May down 3-1/4 at $2.19-1/4 per bushel.
Volume was light, estimated by the exchange at 88,199 futures and 23,478 options.
Traders said a rumour of bird flu in Mexico weighed on the market. But a US Agriculture Department spokesman said the rumour was a hoax and the Mexican agriculture ministry denied that a case of H5N1 bird flu had been found near the US border.
"Just the fact that they used the words 'close to the US border' was enough to scare most people," said Paul Haugens, vice president for trade house at FIMAT Futures. "It's just another sign that it's getting close, but it would have more psychological impact on the grain markets than anything else."
Pressure also stemmed from recent rains in the US Midwest that buoyed prospects for 2006 corn production, they said.
Traders said there was little reaction stemming from updated export data for corn released by the US government on Thursday.
USDA said export sales of US corn last week totalled 948,300 tonnes (old and new crop) last week, within estimates for 900,000 to 1.2 million tonnes.
Analysts and traders have said that, although the demand for corn remains brisk, the huge supply of feed grains continued to act as an anchor on CBOT corn futures prices.
There also are outlooks for a solid production year this year in the heart of the US corn country.
Recent moisture received in the US Midwest has boosted soil moisture reserves and helped boost prospects for seeding of the 2006 corn and soybean crops, they said.
And crop weather in South America is generally satisfactory for harvest of the corn crop there.
Cash basis bids for corn in the Midwest on Thursday were steady at interior locations, but river dealers firmed their basis bids.
Technical support in the May contract at $2.20 per bushel was broken, driving the contract to a session low of $2.18-3/4 per bushel. Resistance was at $2.25.
The nine-day relative strength index for May stood at 40 ahead of the open, falling to 35 by the close. Traders view a reading of 30 or below as indicating an oversold market.
The May contract was below all key moving averages, with key resistance at the 100-day average of $2.23. Oat futures closed 1-3/4 cents lower to 3/4 higher, with May `down 1-1/2 at $1.72-1/4.
Oats volume was estimated at 1,247 futures and 151 options.
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