US corn slipped 1 percent on Monday, posting its biggest one-day drop in two weeks as rain brought a slim promise of improved Midwest crop conditions and investors fretted over the eurozone debt crisis. Corn collapsed from early highs and reversed three straight sessions of gains as traders digested the impact of a euro zone deal to shore up Spain's banks.
Futures rose over 8 percent last week to a two-week high, posting their biggest one-week advance in over a year. Soyabeans reversed early gains as well and ended lower, while wheat closed firm but below the session highs. Investors were dealing with the ongoing global economic turmoil, Tuesday's June supply/demand report to be released by the US government and the early stages of a US weather market that is beginning to rattle corn prices. "A second weather front dumped up to 2 inches of rain in north-west Missouri overnight and right now that front is hovering over the southern half of Illinois and that's pressuring the corn market," said Jerrod Kitt, analyst for The Linn Group.
Chicago Board of Trade July corn futures were down 6 cents at $5.92, July Soyabeans were down 1-1/2 at $14.24-3/4 and CBOT wheat for July delivery was up 1/4 cent at $6.30-1/2. Despite the overnight rain, forecasts for the next couple of weeks suggest that hot, dry weather could further threaten US crop prospects.
Dry weather stress on the US corn and soyabean crops is expected to continue for at least the next two weeks, trimming production potential, an agricultural meteorologist said on Monday. "Soil moisture deficits will grow so it's not a good forecast for the Midwest," said John Dee, meteorologist for Global Weather Monitoring. "It was a warm and dry weekend," he said. "Now through Tuesday about 75 to 80 percent of the Midwest will receive 0.40 inch of rain or less, then it turns dry again," Dee said. Dee said temperatures would cool to the 70s F and lower 80s F this week then warm into the 80s F and low 90s F by the weekend through next week.
Hot and dry weather around the US Midwest has put the US corn and soyabean crops under stress, particularly in southern areas where early-seeded crops were more mature than usual, analysts said. The US Agriculture Department's weekly crop ratings survey was expected to show that US corn was rated 68 percent in good to excellent condition as of Sunday, down 4 percentage points from a week earlier, according to the average estimate in a Reuters survey.