US corn futures on the Chicago Board of Trade closed lower on Wednesday in a setback from recent rallies to 11-year highs and on mounting concerns about a potential recession, traders said. Traders said steep slides in crude oil and gold also weighed on the corn market and traders took note of news that China was ramping up attempts to control runaway inflation.
"China's move goes along with the recession theme. It's more important for energies and metals but China is a huge buyer of soybeans, too," a trader said. China last week said it would begin curbing inflation and on Wednesday issued a list of producers of necessities that must apply for government permission to raise prices.
"Anytime you have a major world importer or exporter putting on price controls it's a big bearish factor," a trader said. Chicago Board of Trade corn futures were 5-1/4 to 7-1/4 cents per bushel lower, with March down 6-1/2 at $5.02-1/2 per bushel.
Estimated volume was huge at 264,596 futures and 91,157 options. "You have the emotion of the lower gold and crude oil market, put it all together and you have a big profit-taking setback at this point in all markets," said Jerry Gidel, analyst for North America Risk Management Inc, referring to Wednesday's broad sell-off in commodities.
Traders and analysts said corn prices may attempt to consolidate around the current price levels after the market spiked higher following the release last Friday of a bullish corn stocks report from the US Department of Agriculture.
In its January crop report on Friday, USDA pegged the ending supply of corn for the current (2007/08) marketing year at 1.438 billion bushels, below an average of analysts' estimates for 1.709 billion and below the range of analyst estimates for 1.564 billion to 1.958 billion bushels.
Some traders were focused on an 8 cents per bushel price gap in the March corn contract that was left from Friday's close to Monday's open. March came within one cent of filling that gap on Wednesday.
"The main thing I'm looking at in corn is the gap and if that is filled and holds, it's pretty positive for corn. And, they're looking for a huge export sales number for corn Thursday," Gidel said. The range of analysts' estimates for Thursday's USDA weekly export sales number for corn was 1,600,000 to 2,100,000 tonnes, above last week's 720,100 tonnes.
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