Corn futures at the Chicago Board of Trade plunged nearly 5 percent to the 20 cent trading limit on Tuesday with rains in the US Midwest and cooler weather at midweek hitting the market, traders said.
"It's all weather, just the weather. There was more rain last night than they expected and they increased the coverage for late this week," said Paul Haugens, vice president for FIMAT USA.
CBoT corn closed down 14-1/2 to 20 cents per bushel, with July down 20 at $3.96 per bushel. New-crop December was down 20 at $4.03-1/2. Trade in Chicago Board of Trade corn options indicated July futures could open down 4 to 6 cents during the overnight e-cbot trade, traders said.
CBoT corn futures fell their 20-cent trading limit on Tuesday and the trade or "synthetics" in options indicated July futures at $3.90-$3.92 per bushel, September $3.97-$4.01 and December $3.98-$4.
Volume was heavy even though trading stopped in the nearby contracts after they fell the 20-cent trading limit and prices stayed there. An estimated 318,449 futures and 89,049 options traded.
Traders said unfilled sell orders of 15,000 lots each were noted in July and December with 7,000 to 8,000 in September. Traders and analysts said crop weather in the heart of US corn country remained the driving force for CBoT corn futures.
Rainfall in the western Midwest this week will maintain favourable growing conditions and rains in the east will improve crop prospects, DTN Meteorlogix weather said on Tuesday. Hot and dry weather is expected to return Sunday through Tuesday but the heat is not expected to stress crops, Meteorlogix said, and more rain is expected by midweek next week.
"With a little more rain falling yesterday than expected, and a little more in the forecast, you're going to temporarily slow the decline in soil moisture," said Mike Palmerino, a forecaster with DTN Meteorlogix.
US farmers this year planted the largest land area to corn since 1944 to take advantage of 10-year highs in corn prices amid strong demand from the ethanol industry.
The current weather patterns overrode potential bullish input from declining crop ratings last week in the United States. The USDA said late on Monday that 70 percent of the US corn crop was in good-to-excellent condition, down from 77 percent in that category a week ago.
Hot and dry weather in the eastern Midwest cut into the conditions for the US corn crop. Global crop weather also continues to be an important factor for corn futures prices at a time big crops are needed. China's northeast Liaoning province, a leading corn-producing area, is suffering its worst drought in 30 years, the official Xinhua news agency said on Tuesday.
Export workings overnight and early on Tuesday included news Israel was tendering for 56,000 tonnes of US, South American or European corn. Spot basis bids in the Midwest were steady to weaker late Tuesday, despite the big drop in futures. Sales were quiet as farmers were sidelined waiting for prices to turnaround, dealers said.
Technical traders watched the July break support at its 100 day moving average of $3.98-1/2, touching off sell-stops. The nine-day relative strength index closed at 52. Traders view an RSI of 70 or more as one indicator of an overbought market and 30 or under as an indicator of an oversold market.
Oat futures closed 13 to 17-1/4 cents per bushel lower, with July down 16-3/4 at $2.72-1/4. Fund long liquidation of the December contract was noted and that activity spilled into the July.