Corn futures on the Chicago Board of Trade closed lower on Tuesday on technical sales by commodity funds, traders said. Funds hold a huge net long position in CBOT corn, making it vulnerable to a technical correction.
"I think the fact it couldn't find a bid with the outside markets, we're starting to see some pressure," said one cash-connected CBOT trader.
Commodity markets have moved in tandem much of this year amid increased participation by funds in these markets. But, over the past week, grains and gold have diverged.
Gold and crude oil prices were stronger on Tuesday while corn and wheat were weaker.
"We really haven't done much but follow wheat around," said one CBOT floor broker.
July corn closed 1-1/2 cents lower at $2.53 per bushel. The back months through December 2007 closed 3/4 cent to 1-1/2 cent weaker.
Corn volume was estimated by the exchange at 152,637 futures and 24,498 options.
July wheat futures closed 6-1/2 cents lower on profit-taking after an early rally to contract highs.
The weather is favourable for the young US corn crop and planting was ahead of schedule. However, some traders said there was some nervousness about the hot weather now in the southern Plains moving into the Midwest.
"The crop progress reports are pretty encouraging here for the start of the growing season," said Jerry Gidel, analyst with North America Risk Management.
The US Agriculture Department said late Monday the US corn crop was 92 percent seeded, within the range of trade estimates for 90 percent to 95 percent and ahead of the five-year average of 87 percent. Emergence was at 66 percent, ahead of the five-year average of 60 percent.
In its first corn condition ratings of the year, USDA said 66 percent of the crop was rated good to excellent. That compared with 63 percent a year ago.
Export business was routine. Taiwan bought 60,000 tonnes of US corn. South Korea bought 55,000 tonnes of US corn for feed production.
Midwest basis bids for corn early Tuesday were mixed - firmer in the western belt and mostly steady in the east. Farmers sales were quiet before the open, dealers said.
CBOT oats closed higher, rebounding from an earlier sell-off. July oats ended 1/2 cent firmer at $1.96-1/2 per bushel. The July/December spread continued to correct, with December settling at a 3-cent discount to July, compared with 10 cents last week.
Oats volume was estimated at 677 futures and 211 options.