June 23, 2010
CBOT corn futures drop to one-week low
CBOT corn futures extended their slide on Tuesday (June 22), falling nearly 2% to a one-week low on chart-based selling and good crop growing weather in the US Midwest.
Soy futures posted modest gains as hot weather threatened the crop in northern China and in the US Southeast but wheat eased joining other commodities in a downside day in general.
US July corn futures closed down 3-1/2 cents per bushel at US$3.51-1/2, July soy futures up 2-1/4 at US$9.65-1/2 and wheat futures for July was down 1-1/4 at US$4.60-3/4..
Corn futures dropped nearly 2% to a one-week low of US$3.48-1/2 as it resumed its downward trend from Monday (June 21) despite a decline in US crop ratings and news China approved offloading of a cargo of US genetically-modified (GM) corn for the first time in four years.
The fact that China was allowing GM corn into the country was encouraging to corn bulls who had been nervous due to the possibility Chinese authorities might reject the cargo.
There also was widespread talk on Tuesday (June 22) that China bought more US corn early this week, a bullish market factor.
However, technical traders noted the July contract had an "outside day" lower on Monday (June 21), trading both above and below the previous day's range and then closing lower, a bearish signal.
"The fact that you did not (rally) after a big outside day down leaves the market very vulnerable," said Roy Huckabay, analyst for The Linn Group.
Before falling 2.5% in the past two sessions, corn rallied for nine straight sessions, gaining nearly 8%.
US crop weather is now a mixed bag with heat in the south starting to cause some concern about harm to the crops but there is plentiful soil moisture in most of the key growing areas of the lush US Midwest.
"Weather is good for corn growth, so that is bearish but it has not been so good for beans. It has been wet in the Midwest, keeping them from planting soy, and now it has turned hot and dry in the Delta," said Joe Bedore, CBOT floor manager for trade house FC Stone.
US spot soy futures held firm as dryness in northern China continued, threatening the soy crop in the world's largest soy importer.
Excessive wet weather in Canada that has trimmed rapeseed production prospects and poor soy planting weather in parts of US also lifted soy futures.
"We still have over five million acres (two million hectares) to plant (in US) and the reduced rapeseed acreage in Canada is supportive. Then you have the dry spell in northern China that is threatening their bean and corn production," said Joe Victor, analyst for research and advisory firm Allendale Inc.
Wheat dropped almost 1%, pressured by a broad pullback in markets as investors took a more cautious view on a move by China to allow its currency greater flexibility.
A lack of bullish news encouraged selling in wheat after strong grains last week.
Last week, front-month CBOT wheat rose 4.8% in its best weekly performance since mid-April as traders remained fixated on heavy rains disrupting planting on millions of acres in the Canadian Prairies.
"In wheat, we have seasonal harvest pressure, they have moved into Kansas, the big wheat state," FC Stone's Bedore said.
