CHICAGO: US corn futures eased nearly one percent on Thursday backing down from a six-week high with a firm dollar and profit-taking lending pressure.
Soybeans and wheat also slipped from over six-week peaks on signs the market had become overheated or technically overbought during a bout of year-end short-covering through mid-week.
Concerns about declining corn and soybean production in South America because of dryness and drought combined with hot weather in Argentina had been boosting each market throughout the last half of December.
"We already have a South American premium in the market," a trader said.
"We're looking at a long weekend with no change in weather in South America. We know what the weather is there now and we have to wait and see if it rains. If it doesn't rain, we'll go up again," said Joe Bedore, Chicago Board of Trade (CBOT) floor manager for trade house Intl FC Stone.
At 10:50 a.m. CST (1650 GMT), CBOT corn for March delivery was down 5-1/4 cents at $6.37-1/4, January soy was down 9-3/4 at $11.88-1/2 and March delivery wheat was down 5 cents at $6.46-1/4..
Analysts in South America this week said Argentina's corn crop will be smaller than expected earlier but still a record,
Widely followed crop scout Michael Cordonnier this week began trimming his crop estimates and Commodity Weather Group issued a special report indicating Argentina's crop at 10 percent below the trendline yield.
The US Department of Agriculture (USDA) in early December forecast Argentina's corn crop at 29.0 million tonnes. USDA will issue updated crop data on Jan. 12.
Argentina is the world's second-largest exporter of corn after the United States, the third-largest soy exporter and the biggest exporter of soyoil and soymeal.
Dry weather is a mounting problem in the key South American producer, and weather in Brazil, the world's second-largest soy exporter, also is less than stellar.
Limited relief from the dryness is expected for at least 10 days in Argentina and moisture deficits are persisting in over two-thirds of the corn belt. "This will continue to lower yields for early-planted corn, now in the latter stages of pollination," said Joel Widenor, agricultural meteorologist for Commodity Weather Group.
The dry areas also can expect heat stress on crops with high temperatures in the mid-90s to 100 degrees Fahrenheit (35-38 degrees Celsius) over the next two weeks.
Dryness is an increasing concern in southern Brazil as well which is affecting more than one-third of the corn and soybean production. "First-crop corn yields are falling in the dry areas," Widenor said.
Copyright Reuters, 2011
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