CBOT Corn Review: Lower On Benign Weather, Weaker Crude

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CHICAGO (Dow Jones)--U.S. corn futures ended lower Tuesday on a sunny crop outlook and pressure from outside markets, traders said.

July Chicago Board of Trade corn ended down 5 cents, or 1.4% to $5.40 per bushel and December corn closed down 4 3/4 cents to $3.75 1/4.

Benign crop weather and the strong start to the U.S. growing season are weighing on the market. While traders and analysts note that it is still early in the growing season, with plenty of potential for problems later on, they say that up to this point conditions have been highly favorable and could set up a second-straight year of record yields.

Good-to-excellent ratings for the crop, already solid, are expected to be even higher in Tuesday's afternoon's crop progress report from the USDA. Estimates for the good-to-excellent rating range from 72% to 75%, up from 71% the prior week. The U.S. Department of Agriculture will release the report at 4 p.m. EDT.

"I know it's already good right now, but I can't see how (the crop) is under any stress at all," a floor trader said.

Traders also noted that the longer-range forecast for June calls for near-average temperatures and above-average rainfall. That will further weigh on the market, as Jason Britt, president of Central State Commodities, noted that the market's greatest sensitivity to weather involves hot and dry temperatures, which are not in the forecast.

Weaker crude oil added to the bearish tone Tuesday, as did a firm dollar, although it softened as the day wore on.

The market's losses did not push it below a wide trading range between $3.50 and $3.80, analysts said.

"I think the market is searching for a new catalyst to break us out of that range," Britt said.

A lack of farmer selling is underpinning the market, and traders say that any further losses are likely to stimulate more demand.

CBOT oats futures ended higher Tuesday. July oats were up 3 1/4 cents, or 1.7% to $1.94 1/4 per bushel and September oats closed up 3 1/4 cents to $2.02 1/2.

Ethanol futures were up slightly. June ethanol closed up $0.002 to $1.602 per gallon and July ethanol settled up $0.005 to $1.599.


-By Ian Berry, Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com



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