Corn futures at the Chicago Board of Trade fell over 3 percent to a fresh eight-month low on Tuesday with overall good crop weather in the US Midwest and spillover pressure from Friday's bearish US corn acreage report hitting the market, traders said.
"It's a combination of forecasts for more rain next week in the drier areas and profit-taking ahead of the holiday," said Jerry Gidel, analyst for North America Risk Management Inc.
Technical selling and position-squaring, including long-liquidation was noted before Wednesday's US Independence Day holiday, they said. "Technically December couldn't hold the $2.43 area and that took it down, technicals in corn have really turned sour," Gidel said.
Traders said sell-stops were hit when December broke support at $3.44, $3.39-40 and $3.37-1/2. Buying of December $3.00 puts also weighed on corn futures. CBOT corn closed 6 to 12-1/2 cents per bushel lower, with July down 10-1/2 at $3.20 per bushel. New-crop December was down 12 at $3.38. An estimated 276,791 futures and 110,669 options traded, compared to 300,497 futures and 93,540 options that traded Monday.
Traders and analysts said the corn market would remain under pressure after the sharply higher US corn acreage forecast from the US government last Friday. Also, weather in the Midwest overall was conducive to crop development as corn enters its key pollination stage of growth.
Long-term forecasts for the US Midwest appear less threatening for the developing corn crop than those made earlier this season, a private forecaster said Tuesday. Heavy rains in the southern Plains, little change in sea surface temperatures in the north Pacific Ocean, and a weakening of the weather anomaly La Nina pointed toward milder-than-expected crop growing conditions during July.
"Because we are going into corn pollination over the next few weeks, having these changes take place give the crop a much better potential for success," said Drew Lerner, agricultural meteorologist and president of World Weather Inc in Kansas City.
July is the critical yield determining period for corn as it pollinates this month, while August is crucial for the soybean crop when it sets and fill pods. The US Agriculture Department late on Monday said 73 percent of the US corn crop was in good to excellent shape and 13 percent was silking or pollinating.
The conditions were unchanged from a week ago. Some traders had expected the ratings to improve by 1 to 2 percentage points. Export activity overnight and early Tuesday failed to generate any bullish momentum for corn futures. Israel bought 110,000 tonnes of US corn, Taiwan passed on a tender for 60,000 tonnes of US corn and South Korea bought 55,000 tonnes of corn.