Corn futures at the Chicago Board of Trade fell to new contract lows and fresh 4-1/2 month lows on Monday on spillover selling by funds after last week's bearish USDA August crop production report, traders said.
"I think it's across-the-board liquidation by the funds. That kept people out of the market earlier in the session, and now we're seeing a continuation of the liquidation that we saw on Friday," said Shawn McCambridge, analyst for Prudential Financial.
CBOT corn closed unchanged to 3-1/2 cents per bushel lower with September down 2-3/4 at $2.22 per bushel. New-crop December was down 3-1/2 at $2.38-1/4 per bushel.
New contract lows were set in the September and December delivery months. The new low for September is $2.18 per bushel, below the previous low of $2.24-1/4 that was set on Friday.
Traders said the corn market was still smarting from the release early Friday by USDA of a US corn production forecast of 10.976 billion bushels, the third largest in US history and above an average of analysts' estimates for 10.795 billion bushels.
The corn market was hit on Friday by huge fund long liquidation following the release of the USDA crop numbers. Friday's trading volume in corn totalled a record 371,918 contracts, above the previous record of 336,422 lots set on May 12, according to the CBOT. Funds on Monday sold 10,000 to 15,000 lots, traders said.
Volume remained heavy at an estimated 267,007 corn futures and 88,703 options. Electronic volume accounted for roughly 100,000 contracts, including the overnight and daytime sessions. Good crop weather in the US Midwest also was weighing on corn and soybean futures, the traders said.
"You're not giving prospective buyers much of an incentive to move into the market, considering the good weather conditions that we've been having. So without much of an incentive to move in, they are just going to let the funds chip away at these prices for a while," McCambridge said.
Moderate temperatures and showers in the US Midwest were favouring the ear-filling stage of development for corn and pod-setting of soy, Meteorlogix weather service said.
Export action failed to generate any bullish momentum. Israel over the weekend bought 56,000 tonnes of corn from either the United States or South America. And the Jilin Grain Group said that in the future China's corn exports would dry up amid an expansion of the country's processing industry.
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