Futures on corn dropped on Wednesday amid profit being fixed, despite expectations of hotter weather in the USA that will keep on affecting grains harvest.
By the end of CBOT trades December futures on corn declined down to 1.4% and equaled thus USD 6.77 ¾ per bushel.
On Wednesday market participants closed their long positions amid profit fixation after the growth by 22% since the beginning of this month.
However, this drop was restricted as the market has been supported by the drought in the Mid West of the USA and southern region of the country. These factors are exacerbating the sentiment of investors regarding increasingly less harvest. Meanwhile, the US grain reserves are at their all-time lows and so farmers are to grow considerable crops to prevent the supply crisis. That is why bad weather conditions may well cause panic on the market and lead to soaring futures.
According to Freese-Notis Weather meteorological agency, temperatures in the Mid West regions and US southern parts may well run over 35 Celsius degrees, whereas no precipitations are expected this week. At the same time the agency also informed that the corn harvest may be put under stress until the end of the current month.
Traders have been attentively observing weather conditions as they have been rather concerned about fewer supplies. These concerns pushed the prices up to all-time highs last month. Since then futures have rolled back by 12%. Nevertheless, corn consumers are still concerned about harvest which is now just ripening.
On Monday the US Agriculture Department is expected to downgrade the rating of the harvest condition owing to the continuous drought.
On July 20 the US Agriculture Department announced that 138 000 tons of corn were sold to South Korea with the supply scheduled until September.