CBOT Corn Review: Retreats On Global Economic Concerns

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CHICAGO (Dow Jones)--Corn futures fell Tuesday, retreating under the cloud of global economic concerns.

Nearby Chicago Board of Trade July corn settled at $3.64 1/4, down 6 3/4 cents or 1.82%, and December corn ended 6 1/4 cent, or 1.61% lower, at $3.82 3/4.

Worries about global economic growth in the face of Europe's bulging sovereign debt issues produced broad-based losses in financial and commodity markets. The U.S. dollar soared versus the euro; crude oil was sharply lower; and equity markets stumbled as well.

A firmer dollar is seen as bearish for commodity prices, as its makes U.S. grain prices more expensive in the world market.

The session's losses were clearly related to outside factors, particularly without any fresh supportive news to offset the defensive theme, said Jack Scoville, analyst with Price Futures Group in Chicago.

Improved corn crop ratings reflective of beneficial Midwest weather provided fundamental pressure to aide the market's defensive tone, Scoville said. The market is on track to set its spring lows, as warmer conditions are providing the heat newly planted crops need to energize the growth process, he added.

U.S. Department of Agriculture reported Monday a bearish increase in the portion of the crop rated good-to-excellent, to 71% from 67% the prior week. Analysts were expecting conditions to hold steady or increase by as much as 2 percentage points.

The swift planting of the 2010 U.S. corn crop in conjunction with favorable growing weather raises the potential for strong yields and record production baring any summer weather issues.

Nevertheless, fundamentals took a back seat in market attention, as the uncertainty of global economic growth enticed many participants to reduced exposure in riskier commodity markets. Speculative funds were estimated sellers of 10,000 lots in corn. Fund activity is a measure of investment money flow in the market.

The T-storm Weather forecast said widely scattered thunderstorms will focus on the western/central Corn Belt and Delta over the next few days. Otherwise, warm to unseasonably warm weather continues across all corn and soybean areas through the weekend, which speeds crop growth, T-storm Weather said.

CBOT oats ended lower, backpedaling on outside market pressure and favorable crop conditions. July oats settled down 7 1/2 cents or 3.77% to $1.91 1/2.

Ethanol futures were lower, down in step with weakness in the energy sector. June ethanol closed $0.023, or 1.44% lower, at $1.580 and July ethanol settled down $0.026, or 1.62%, to $1.582 a gallon.


-By Andrew Johnson Jr., Dow Jones Newswires, (312) 347-4604 andrew.johnsonjr@dowjones.com


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