October 19, 2010

US corn futures fall on harvest pressure

US corn futures fell for a fourth straight day Monday on harvest pressure and a lack of fresh supportive news, which prompted more profit-taking.

CBOT December corn ended down 5 3/4 cents, or 1%, at US$5.57 1/4, and March corn closed down 5 3/4 cents at US$5.69 1/4.

The market, which had surged early last week on lower-than-expected supplies, has run out of momentum, at least for the moment. While many traders expect further reductions in the size of the crop, they note it will be three weeks before the government issues a new crop projection.

The ongoing harvest, which is progressing nicely due to favorable weather, is also weighing on prices, analysts said, as more supplies come into the market and farmers are eager to sell. Traders were awaiting Monday afternoon's crop progress report, with analysts expecting anywhere from 60-70% of the harvest to be complete, up from 51% the prior week.

Analysts said that export pace seems to have slowed. Farmers eager to sell at historically high prices and harvest progress added to the pressure on the market, traders said.

Some analysts believe that the market's surge above US$5.50 is starting to discourage fresh demand, but others disagree.

Analysts say that while the current high prices could harm livestock producers, who depend on corn for feed, in the long-run, in the short term they are selling livestock that was fed on cheaper corn from earlier in the year.

Technically, the market set a one-week low Monday but has to fill in a gap on the technical chart stemming from last week's rally in order to signal a possible top in the market, traders said.