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CBOT corn closes lower on fund selling, rainfall

CHICAGO: Corn futures at the Chicago Board of Trade closed lower on Tuesday on fund selling that trimmed early support linked to an outlook for stronger feed usage from the US livestock industry.

Corn closed 1/2 to 1-1/4 cents lower, with March down 1-1/4 at $2.19-1/4.

Some pressure on the market may have come from some outlooks for moisture this week in the US Midwest corn growing region.

Rain was forecast for this week in many dry crop regions of the central United States, but the driest wheat areas in Kansas, Oklahoma and Texas may receive the least amount of moisture, meteorologists said Tuesday.

A second storm system late Thursday or early Friday should bring more rain to the Midwest, meteorologists said.

"The next system looks to be even better. This would be Friday in Minnesota, Iowa and Nebraska," said Mike Palmerino, meteorologist with Weather Services Corp.

He expected 0.25 to 1.0 inch of rain in that area, with 70 percent coverage. The system should move east and bring rain to Illinois, Indiana and Ohio.

Corn futures found underpinning from the US Department of Agriculture's latest seven-state Cattle on Feed Report released Friday.

The USDA listed cattle on feed in US feedlots as of Feb. 1 in the seven major cattle-producing states at 9.885 million head, 111 percent of a year ago. It also marked the 10th consecutive month of record on-feed numbers.

Cattle placed into feedlots in January were 115 percent of a year ago.

The numbers indicated that the US corn market can continue to count on robust demand from the domestic livestock sector, which consumes the majority of the corn produced in the United States each year.

The USDA projected corn feed and residual use for 1999/2000 at 5.65 billion bushels, or 50 percent of total US corn supplies.

Support for corn futures also stemmed from strength in wheat and soybeans and ongoing concern over dry soils in the Midwest as the spring planting season nears. Widespread snowfall last week in the Midwest should provide some moisture relief, meteorologists said.

In export news early Tuesday, the Korea Feed Association bought 52,500 tonnes of Chinese or US corn.

Market activity this week likely will also focus on the approaching delivery period for March CBOT contracts, traders said. March corn enters delivery Feb. 29, first notice day for March CBOT agricultural futures.

Funds sold at least 4,500 contracts on the day. O'Connor & Co. sold about 4,500 May and 2,000 July on the day and Refco Inc. sold 2,500 May, much of it near the close. Prudential Securities bought 700 May and Farmers Commodities Corp. bought 600 March.

Corn futures volume was estimated by the CBOT at 70,000 lots, above the 60,017 lots traded Friday.

Corn options volume was estimated at 12,000 lots.-Reuters