US corn futures drops two percent on strong dollar, weather

US corn futures lost more ground on Monday, dropping nearly two percent to hover around four-month lows as a strengthening dollar joined favourable crop weather to hammer grain markets.

 

Soy fell 1.3 percent, while wheat edged lower as US crop weather boosted hopes of plentiful supplies.

 

Corn lost more than 10 percent last week, and the market is likely to come under more pressure on perfect growing weather, which comes after the USDA reported this year's corn acreage at 87 million acres, the second-largest seedings since 1946.

 

The US dollar will be receiving much support ahead of the G8 meeting which is keeping the commodity prices on the defensive, said Garry Booth, a trader with MF Global Australia.

 

Booth added the favourable weather outlook in the US and other countries will also keep a lid over commodity prices.

 

The US weather is key to grains, especially corn which pollinates in July. So far, growing conditions have been nearly ideal west of the Mississippi River.

 

Informa Economics last week predicted the 2009 US corn crop would be 12.5 billion bushels, with an average yield of 156.3 bushels per acre, traders said.

 

The CBOT July corn contract fell two percent to US$3.39 a bushel, trading near the lowest level since March 2.

 

July soy futures fell 1.3 percent to US$12.27 a bushel and July wheat lost 0.05 percent to US$5 a bushel.

 

Analysts said the grain markets were also weighed down by India's decision to allow the export of 900,000 tonnes of wheat by state-run firms and 650,000 tonnes of wheat products by private trade as monsoon rains revived after a dry spell. India has been a net wheat importer in recent years.

 

The dollar went stronger against a basket of currencies on Monday, which makes US products more expensive for foreign buyers.