August 11, 2010

CBOT corn drops most in three weeks

Corn futures fell the most in three weeks and soy declined, ending the longest rally since 2007, on speculation that rain will improve crops in the US.

About 71% of the corn crop was rated in good or excellent condition as of August 8, up from 68% a year earlier, the USDA said. About 66% of soy got the top ratings, unchanged from last year. Parts of the Midwest may get 2.9 inches (7.4 centimetres) of rain in the next five days, the National Weather Service said.

"The crops are fantastic," said Rich Nelson, the director of research for Allendale Inc., a brokerage in McHenry, Illinois. "The market is starting to focus on bigger US crops."

Corn futures for December delivery fell nine cents, or 2.2%, to close at US$4.09 a bushel at 1:15 p.m. on the Chicago Board of Trade, the biggest decline since July 19. On August 4, the most-active contract reached a 13-month high of US$4.39 after Russia halted grain exports for the rest of the year following a drought.

Soy futures for November delivery slid 13 cents, or 1.3%, to US$10.22 a bushel. The price climbed in the previous nine sessions, the longest rally since November 2007. On August 5, the oilseed reached US$10.49, the highest level since January 7.

Prices also fell on signs the economies in the US and China are cooling, Nelson said.

Reports in China, the leading soy buyer and second- biggest corn consumer, showed the pace of increases in imports and property prices slowed in July. The Shanghai Composite Index fell the most in six months. US data last week indicated a sluggish jobs market.

"There are increased worries about the health of the world economy," Nelson said. "The deflation story is surfacing again."