September 28, 2010

US corn futures fall due to favourable harvest weather

US corn futures fell on Monday (Sep 27) due to ideal harvest weather, waning technical strength, and profit-taking.

December CBOT corn futures ended down US$0.09, or 1.7%, to US$5.12 three-quarters per bushel, and March corn settled down US$0.09 cents to US$5.25 one-quarter.

The market opened lower and ended at session lows. A rain-free forecast for the next week weighed on the market, as it will allow for good harvest progress, traders said. That will send more supplies into the pipeline and help ensure that the crop doesn't encounter the same quality problems that plagued it during a long, wet harvest in 2009.

Traders added that with prices at two-year highs, the market is seen as overbought. The USDA is releasing a quarterly grains stocks report Thursday, which some fear might be bearish.

A trader said that with the report looming and the end of the month and quarter approaching, some traders have reason to take profits after the sharp recent gains. Funds sold an estimated 13,000 contracts Monday.

While the harvest pace is expected to pick up this week, traders mostly say the quality of what has been harvested has been disappointing. Most traders are anticipating a crop of about 160 bushels per acre nationally, down from 164.7 bushels last year, but bulls are talking about yields closer to 155 bushels. That would lead to sharply tighter supplies, traders say.

End-users are hoping that yield reports improve into areas of northern Iowa, Minnesota and the Dakotas.