US corn futures on the Chicago Board of Trade fell the 20-cent per bushel limit on Wednesday on concerns about a slowing global economy and the possibility of a US-led recession, traders said. Traders monitored US stock markets to gauge recessionary fears.
The early drop in the Dow Jones industrial average of more than 200 points set a weak tone in Chicago. It wasn't until after the Chicago markets closed that the Dow sprang back to end nearly 300 points higher. "There was a lack of technical buying in the commodity sector. Then you had the influence of the outside markets," one CBOT corn broker said.
The March corn contract was the only month that did not close limit down - ending 19-3/4 cents lower at $4.69-1/4 per bushel. New-crop December locked limit down at $4.84. Once the limit decline halted trade in futures, traders turned to the options mart. Late options trade indicated that December corn was 24 to 26 cents lower than Tuesday's settlement.
Volume was heavy, especially in options. An estimated 243,424 futures and 101,573 options traded. Commodity funds were liquidating long positions, selling about 12,000 corn contracts, traders said.
Even without the recession jitters, the CBOT grain and oilseed markets were poised for a technical setback after rising to record highs since the first of year. Commodities were attractive to Wall Street speculators as an inflation hedge amid outlooks for strong demand for grains and soybeans, traders said.
Demand for US corn remains strong despite high prices. Export news featured South Korea buying 220,000 tonnes of corn, traders in Seoul said on Wednesday. Also supportive were concerns about dryness in Argentina, the No 2 global corn exporter behind the United States.
The corn and soybean belt will be dry or see a few light showers through Friday, said a DTN Meteorlogix forecaster. Scattered showers of 0.10 to 0.50 inch were expected on Saturday, which is down from an earlier forecast for 0.30 to 1.50 inches.