20000317CBOT corn ends down on weather, technical setback

CHICAGO: Corn futures at the Chicago Board of Trade closed lower on Wednesday in a technical pullback after climbing to 6-1/2-month highs on Tuesday fuelled by dry weather concerns in the U.S. Midwest, traders said.

Corn closed 1/2 to 2-1/2 cents lower with May down 2 at $2.36.

"When drought hits the headlines I'm not too surprised at the fund buying, but yesterday was overdone and we need a couple days of correction," said Shawn McCambridge, analyst for Prudential Securities.

The market was also weighed down by stepped up farmer selling in cash markets on Tuesday as producers took advantage of the rallies on Monday and Tuesday.

Corn basis bids across the Midwest were steady to 3 cents per bushel lower early Wednesday.

U.S. FOB gulf corn and soyabean basis values were steady to lower late Tuesday in reaction to a greater flow of supplies into market channels, grain dealers said.

Futures were also burdened by forecasts for significant rain in the Midwest on Thursday that could boost soil moisture depleted in many areas because of the unseasonably warm and dry winter.

Concerns over the weather conditions coupled with a U.S. government forecast for drought in the Midwest this spring when corn and soyabeans are seeded took corn higher early this week.

Weather Services Corp. forecast rain over the Ohio River Valley Thursday with light rain elsewhere in the Midwest and rain mixed with snow possible in northern Illinois and northwestern Indiana.

The rainfall amounts will range from 0.25 inch to 1.00 inch, with locally heavier amounts, WSC said. It will be dry and colder Friday and Saturday.

There were further indications of stiff competition for the United States in export markets, especially from China.

South Korea's Cheil Jedang Corp has invited tenders to buy 24,000 tonnes of Chinese corn on Thursday, traders in Seoul said on Wednesday.

News of a sale of U.S. corn to Russia failed to stem the declines.

U.S. grain exporters said Russia bought 237,000 tonnes of PL-480 corn early Wednesday. The deal included 197,000 tonnes at $99.07 per tonne, FOB, and 40,000 at $99.46, exporters said. They said the prices suggest it was No. 3 yellow corn.

Technical traders cited support in May corn at $2.33 and resistance at $2.40-1/2.

ADM Investor Services bought 1,000 May, O'Connor and Co. bought 1,500 May and FIMAT Futures sold 1,500 May. Prudential Securities bought 1,500 May $2.30 puts at 4-1/2 cents. Farmers Commodities Corp sold 400 May and sold 300 December.

Corn futures volume was estimated by the CBOT at 90,000 lots, below the 153,416 lots traded Tuesday.

Corn options volume was estimated at 35,000 lots.-Reuters