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CBOT corn falls near six-week low on rain outlook

CHICAGO: Corn futures at the Chicago Board of Trade closed lower on Wednesday, near six-week lows, on follow-through from Tuesday's declines and an improved moisture outlook for the US Midwest corn belt, traders said.

Corn closed 3 to 5 cents per bushel lower, with March down 4 at $2.15-1/4. May closed 4-3/4 lower at $2.23-1/4.

"We went up for the most part on weather and the weather has changed a bit so consequently we're taking some weather premium out," said Don Roose, analyst for US Commodities, Des Moines Iowa. Also "with first notice day coming up, a lot of longs are getting out of their position." First notice day for deliveries on the March contracts is Feb. 29.

But traders and analysts said the apparent shift in weather patterns in the Midwest was central to nudging many spec longs out of their positions.

Badly needed rain fell on dry fields from Texas to the Dakotas on Wednesday, and more rain was due in coming weeks, meteorologists said.

Forecasters now expect a wet weather pattern to replace the dry one that has been in place since last summer.

"We are going to have to call it a wet weather pattern," said Harvey Freese, a meteorologist with Freese-Notis Weather. "It is a definite shift in the weather pattern."

Freese said some areas in the central United States will continue to be dry, but the size of the dry areas will shrink.

Forecasts Wednesday for the Midwest were similar to outlooks Tuesday, with at least 70 percent of the region expected to receive 1/4 to 1 inch of precipitation by the end of the week. The precipitation should provide a boost for Midwest soils after a relatively dry fall and winter, traders said. Dryness was becoming more of a concern with the spring corn and soybean planting season approaching.

"We have experienced an extremely dry fall and winter throughout most of the Midwest," said Brian Scott, a trader with RJ O'Brien & Associates, a Chicago trading firm. "However, we are seeing good rain events in many areas over the past week and there are projections for more rain across the Midwest along with unseasonably warmer temps. Basically any major concerns regarding weather at this point should be taking a back seat."

In export news, South Korea's National Livestock Cooperative Federation bought 220,000 tonnes of Chinese or US corn via tenders on Wednesday, traders said. It also passed on tenders to buy another 105,000 tonnes, citing high prices.

Funds sold at least 7,000 contracts on the day. O'Connor & Co. sold 500 March, 2,500 May and 500 July, RJ O'Brien sold 1,000 March and ADM Investor Services sold 1,000 May and 700 July.

Corn futures volume was estimated by the CBOT at 105,000 lots, above the 78,964 lots traded Tuesday.

Corn options volume was estimated at 25,000 lots.-Reuters