Corn futures at the Chicago Board of Trade fell on Wednesday on a setback from the rally in late May to one-month highs with rolling of longs out of July and bear-spreading featured, traders said.
"The market kind of failed yesterday. Corn failed to break out and the wheat was into new highs and failed. Technicians were pretty bearish this morning for good reason based on that performance," said Dan Cekander, analyst for FIMAT USA. CBOT corn closed 5-1/2 cents per bushel lower to 2 higher, with July down 5-1/2 at $3.74-3/4 per bushel. New-crop December was down 1-1/2 at $3.81-1/4.
Volume was estimated by the CBOT at 243,252 corn futures and 62,204 options. Traders said profit-taking pressure in the soy and wheat futures markets lent spill-over pressure to the corn market. And another spate of long liquidation in the July contract including rolling of positions out of that month rattled corn spreads.
The July/December spread closed at 6-1/2 cents per bushel, premium December, and the July contract lost 4 cents per bushel relative to December. Weather jitters remained a factor, with current overall good weather in the US Midwest pressuring values while some outlooks for potential hot and dry weather this summer in the Midwest limited declines of corn futures prices.
Traders said some weather forecasters continued to cite the possibility for a moisture-robbing high-pressure ridge to form over the Midwest this growing season.
That could lead to hot and dry weather in the US Corn Belt which could trim corn production at a time huge corn output is needed to fuel the surging ethanol industry. US farmers made rapid progress sowing the crop, and plentiful soil moisture reserves in most growing areas have given the crop a good start for the 2007 crop year.
DTN Meteorlogix weather said Wednesday that showers in the western Midwest were maintaining favourable moisture levels for the growing crops and drier weather is likely in the eastern Midwest over the next 10 days.
There are some pockets of dryness in the eastern growing region, especially in central Illinois, which have kept the corn futures market on edge. Cash basis bids for corn in the Midwest were mostly steady amid little selling interest from farmers.
Options trade featured selling of July put options in the $3.65-$3.80 strikes as firms liquidated position before expiration in a couple weeks. About 3,000-4,000 July puts were sold, which softened volatilities.