Chicago | Reuters — U.S. corn futures tumbled nearly six per cent on Tuesday, the biggest one-day slide in three years, as forecasts for less-threatening weather in the Midwest prompted funds to liquidate long positions, traders said.
Soybeans and wheat followed corn’s lead. K.C. hard red winter wheat futures hit contract lows.
At the Chicago Board of Trade, the July corn contract settled down its daily 25-cent limit at $3.96-1/4 a bushel, its lowest level since May 25 (all figures US$).
July soybeans ended down 10-1/4 cents at $11.33-1/4 a bushel after dropping to $11.28-3/4, near last week’s low. CBOT July soft red winter wheat settled down 14-1/2 cents at $4.58-1/2 a bushel.
Corn’s 5.9 per cent drop was the biggest for a spot contract since September 2013. After Tuesday’s close, the CME Group, parent of the CBOT, said it would expand the daily trading limit in corn to 40 cents a bushel for Wednesday’s session, expanding from the normal limit of 25 cents.
Technical selling accelerated on Tuesday as new-crop December corn fell through chart support near $4.20.
“It’s grand-scale liquidation in the corn market due to better moisture in the forecast and cooling temperatures,” said `Tom Fritz, a partner with EFG Group in Chicago. “It looks like you hit some major sell-stops.”
Commodity funds had built up a massive net long position in CBOT corn in recent weeks as the spot contract neared a two-year high on export demand tied to tightening South American supplies and uncertainty about the U.S. growing season.
But the U.S. Department of Agriculture’s weekly crop progress report late on Monday rated 75 per cent of the U.S. corn acreage in good to excellent condition, unchanged from the previous week, despite a hot spell in the Midwest. Analysts surveyed by Reuters had expected a decline in crop ratings.
Forecasters called for much-needed rains this week, easing worries about dryness. USDA’s report showed topsoil moisture declining in big corn states, including Iowa, Illinois and Missouri.
“The prediction of rain has gone some way to allaying fears of an overly dry summer,” Commerzbank said in a market note.
Soybean futures sagged in sympathy with corn, although confirmation of fresh export sales of U.S. soybeans and soyoil lent underlying support.
USDA rated 73 per cent of the U.S. soybean crop as good to excellent, down from 74 per cent a week earlier and in line with trade expectations.
CBOT wheat followed the weaker trend, with the July contract dipping to $4.57-1/4 a bushel, its lowest since May 12.
The market faced additional seasonal pressure from the U.S. winter wheat harvest, which was 25 per cent complete by Sunday, USDA said.
— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Nigel Hunt in London and Melanie Burton in Melbourne.