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CBOT corn closes lower on overbought ideas

CHICAGO: Corn futures at the Chicago Board of Trade closed lower on Monday on a setback amid signals the market was overbought during the rally late last week, traders said.

Fund selling led the way down with the total fund sales estimated at roughly 4,000 lots.

Corn closed 1/2 to 2-1/2 cents lower, with May down 1-3/4 at $2.34-1/4.

Corn opened firm early Monday on renewed concerns about dry weather in the Midwest. But there was a lack of bullish momentum or follow-through after the opening, leaving the market vulnerable for a correction, traders said.

"Commercials will not extend coverage (purchase futures) with new crop prices at these levels at this time," said Dan Cekander, analyst for FIMAT Futures. "If we were in a dry weather market like this in May or June it might be a different story but it's hard to get very bullish in early April."

New crop December corn Monday closed at a relatively high level of $2.59-1/2 on Monday.

The US corn crop has not been seeded yet and some analysts cite the prospects for early seedings this year as a harbinger of strong corn yields should late spring and summer weather turn damper and therefore more favourable for crop growth and development. Salomon Smith Barney, in its weather report, said the weekend rainfall in the Midwest was disappointing.

It said 30 to 35 percent of the region received 0.2-0.9 inch of rain. The next chance of precipitation will be on Friday, with 0.2 to 1.0 inch of rain seen over 35 to 40 percent of the Corn Belt.

An unseasonably warm and dry winter caused high evaporation in many parts of the Midwest corn and soyabean growing region, depleting soil moisture reserves.

Weather Services Corp. meteorologist Joel Burgio said light and scattered rainfall is likely Monday through the coming weekend in the Midwest.

There was some concern Monday about the fate of US corn exports to South Korea pending the determination of the extent of foot and mouth disease in that country.

"The Korean feed situation is perceived in the short term as maybe a little negative on possible decreased feed consumption," Cekander said.

South Korea, aiming to contain the spread of a deadly cattle disease, is investigating reports of outbreaks at 10 more farms, the Agriculture Ministry said on Monday.

"Ten other farms have reported suspected disease in their cattle," a ministry official said.

Foot and mouth is a potentially fatal and highly contagious disease in cloven-hoofed animals, including cattle and pigs, but it cannot be transmitted to humans.

However, a spread of the disease can be devastating to a country's livestock industry.

An outbreak of foot-and-mouth disease in Taiwan in 1997 forced authorities to slaughter a quarter of the island's 14 million pigs.

The US Department of Agriculture said private exporters sold 105,000 tonnes of US corn to Turkey for delivery in the 1999/2000 marketing year that began Sept. 1.

Funds sold 4,000 lots. Refco Inc. sold 1,200 May and bought 300 May, Iowa Grain bought 400 May, Cargill Inc. bought 1,800 May, and ADM Investor Services bought 1,000 December.

Corn futures volume was estimated by the CBOT at 68,000 lots, below the 76,212 lots traded Friday.

Corn options volume was estimated at 15,000 lots. -Reuters