Corn futures at the Chicago Board of Trade slipped on Tuesday as a good start to this year's growing season and mostly favourable Midwest crop weather spurred fund long liquidation, traders said.
The sell-off in gold added to the weakness. With the increased participation by index-type funds in commodities, they tend to move in tandem.
"This market blew up on fear of weather and inflation ... the weather has turned non-threatening and there was a break in inflationary items - gold and silver. So it's no surprise we can't hold," said analyst Don Roose with US Commodities, Des Moines, Iowa.
July corn closed 5-1/4 cents lower at $2.47-3/4 per bushel, after gapping lower on the open. The deferred months ended 4 to 6-1/4 cents weaker. Commodity funds sold about 10,000 contracts; Prudential Financial and SA Trading were featured each selling 2,000 to 3,500 December, traders said. Estimated volume was 166,677 futures and 29,223 options, up from the 157,311 futures traded on Monday.
The US Agriculture Department said late Monday that 71 percent of the US corn crop was rated good to excellent as of Sunday, up from 70 percent the previous week. The government rating was in line with trade expectations.
Meteorlogix said Midwest weather should be favourable for crop development over the next week, with scattered light showers. The eastern belt will be cooler but the western Midwest will be hot, with highs in the 80s to low 90s degrees Fahrenheit.
In exports, an Israeli consortium tendered to buy 48,000 to 56,000 tonnes of corn from the United States or South America and 7,000 tonnes of US or South American soyameal.
Argentina's corn harvest slowed last week, the Buenos Aires Grain Exchange said. Corn yields edged up to 6.47 tonnes per hectare from 6.45 a week ago. The exchange forecasts 6.5 tonnes per hectare by year-end, or enough for a harvest of 14.4 million tonnes.
Spot basis bids for corn in the US Midwest were steady to firm late Tuesday with farmer selling quiet after the drop in CBOT prices, dealers said. CBOT oat futures closed lower, following the rest of the grains markets down. July oats ended 4 cents down at $1.86-1/2 per bushel, with the deferreds 2 to 4 cents weaker.