Corn futures at the Chicago Board of Trade fell almost 5 percent on Friday on crop-friendly rains in the US Midwest overnight and forecasts for better crop weather to continue, traders said.
"It's raining in the dry areas and we'll have to get used to this volatility. What used to be a 5 to 10 cent move is now 15 to 20 cents and it isn't easy," said Dan Cekander, analyst for FIMAT USA. CBoT corn closed 5-3/4 to 18 cents per bushel lower, with July down 17-1/2 at $3.67-1/2 per bushel. New-crop December was down 17-1/2 at $3.81-1/2 per bushel.
Traders and analysts said volatile dealings were expected with weather the key driver of the market as the US corn crop is poised to enter the July pollination period.
"It's really going to be volatile when corn starts pollinating and beans start setting pods," he said. US farmers have planted the largest corn area since 1944 to take advantage of the highest corn price in a decade amid the surging demand for corn from the ethanol sector.
Showers on Thursday and early Friday produced much-needed rain in parts of the eastern US Corn Belt, bringing a measure of relief to developing corn and soybean crops, a private forecaster said Friday.
Central and northern Illinois received 0.3 to 1.5 inches of rain with 70 to 80 percent coverage. But lesser amounts fell in Indiana, and Ohio was mostly dry. More rain was expected in the region in the second half of next week, but again, the rains could fade toward the east.
"There was certainly some very beneficial rain in some of the driest areas of Illinois, and more coming, so we're going to continue to improve the soil moisture conditions," DTN Meteorlogix forecaster Mike Palmerino said.
"The issue will be that the improvement will diminish as you go eastward. We will continue to see significant dryness in eastern areas of Indiana, and that would extend on into Ohio," he said.
Dry weather has been stressing the corn crop in the eastern Midwest, including portions of key corn states Illinois, Indiana and Ohio, and rains now will help buoy crop prospects. "It's really going to be volatile when corn starts pollinating and beans start setting pods," Cekander said. The brisk demand for corn and related high prices has led to speculation about the fate of China's grain reserves, especially corn.
China is not likely to import corn at least until the end of this year, despite domestic prices hitting record highs, trade sources in Hong Kong said on Friday.
Cash basis bids in the Midwest were steady to firm as grain dealers tried to stabilise cash prices. Cash bids for corn fell along rivers as the amount of grain in the pipeline outweighed export demand, an Illinois dealer said.
Technical traders watched the July contract fall below support at its 50 and 100 day moving averages, touching off sell-stops and the nine-day relative strength index closed on Friday at 34.