Corn drops on better crop weather

Corn futures at the Chicago Board of Trade fell 3 percent to an 8-month low on Wednesday on outlooks for better crop weather next week in the US Midwest crop region, traders said. "The weather looks overall pretty good now and the extended outlooks changed to more favourable weather," said Joe Victor, analyst for Allendale Inc.
CBOT corn closed 7 to 13-1/4 cents per bushel lower, with July down 12-3/4 at $3.43-3/4 per bushel. New-crop December was down 13 at $3.62 per bushel. Estimated volume was heavy at 338,816 futures and 81,987 options, compared to 295,333 futures and 49,427 options traded Tuesday.
Key support was broken in the new-crop December contract at its 200-day moving average of $3.69 per bushel, touching off sell-stops and driving the contract to a one-month low.
Scattered showers brushed through the US Midwest in the past day, with more expected this week, recharging topsoil moisture in the eastern belt and giving crops a much-needed drink, a forecaster said Wednesday.
The extended forecast for next week also looked less threatening as a high pressure ridge will fade quickly, diminishing the potential for an extended hot, dry spell that could harm crops, he said.
"A ridge will nose into the area early next week, then back off later. Yesterday it looked like it might hang around longer," added DTN Meteorlogix forecaster Joel Burgio.
US farmers have planted the largest corn area since 1944 to take advantage of 10-year high prices amid the strong demand for corn from the ethanol industry.
The US Department of Agriculture at 7:30 am CDT (1230 GMT) on Friday will release its highly anticipated June plantings report and there was a wide range in analyst estimates for this year's US corn area.
The average of analysts' estimates was for corn acreage this year to total 90.618 million, up from the USDA outlook in March for 90.454 million. The lowest estimate was for 89.850 million and the highest was 91.704 million acres.
USDA also will release its quarterly stocks report on Friday and the average of analysts' estimates pegged the US corn supply on June 1 at 3.456 billion bushels, below the 4.362 billion in storage on June 1 last year. Surging demand for corn to fuel the ethanol industry has been drawing down the supply despite big production for three years in a row.
The range of estimates was from 3.397 billion to 3.529 billion. Crop weather in the United States remains the key focus for corn futures but less-than-ideal weather in China also is getting some play.
Drought in China's top corn and soy region may last another week and could trim grain production, agriculture officials in Beijing said on Wednesday.
Cash basis bids in the Midwest were flat to higher and farmer selling was slow. Oat futures closed unchanged to 7-1/2 cents per bushel lower, with July down 2-1/2 at $2.60-1/2 per bushel. Volume was heavy estimated at 3,099 futures and 16 options.