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CBOT corn closes lower on technical correction

CHICAGO: Corn futures at the Chicago Board of Trade closed lower Wednesday, primarily in a technical correction from recent sharp advances, traders said.

Corn closed 4 to 4-3/4 cents lower with March down 4-1/2 at $2.23.

"It took a breather today. It was stretched out technically and it was getting a little uncompetitive in the world market, especially with China," said Don Roose, analyst for U.S. Commodities, Des Moines, Iowa.

Corn futures surged to their highest levels in nearly four months earlier this week, but the rally left the market technically overbought, traders said.

Scattered farmer selling around the U.S. Midwest led to some weakness in cash bids, which also pressured futures. Farmer selling typically leads to hedging pressure on futures.

The market may be poised for a short-term setback, but longer-term prospects remain bullish, technicians said. Stronger technicals have prompted heavy corn buying by commodity funds over the past two weeks, traders said.

The Linn Group, a Chicago trading firm, said significantly strengthened technicals should help push March corn futures toward a target of $2.31 to $2.35.

Tuesday's price action "merely confirms our bull momentum, with limited setbacks of 1 to 2 cents until we complete those objectives," Linn Group said in a report Wednesday.

The report said $2.35-1/2 weekly highs will be an important target.

"How we handle that trade will dictate the potential for a very explosive spring market."

Funds sold 1,500 lots. Commercials bought 3,500 lots. ADM Investor Services sold 1,000 July and bought 1,000 May, R.J. O'Brien sold 500 December, Refco Inc. sold 700 March and bought 500 May, O'Connor bought 900 March and Cargill bought 1,500 March and 400 May.

Corn futures volume was estimated by the CBOT at 75,000 lots, below the 76,330 lots traded Tuesday.

Corn options volume was estimated at 26,000 lots.-Reuters