March 20, 2012 / 12:21 PM / 6 years ago

GRAINS-Corn, soy fall on long liquidation, good US weather

* Soy, corn post biggest daily declines since January
    * Funds liquidate longs after Monday's chart reversals
    * Unusually mild U.S. weather favors early start to planting
    * Worries about slowing growth in China add pressure

 (Updates with closing U.S. prices)	
    By Julie Ingwersen	
    CHICAGO, March 20 (Reuters) - U.S. corn futures fell 2.4
percent o n T uesday while soybeans and wheat also slid as funds
liquidated long positions amid bearish chart signals and
favorable U.S. crop weather.	
    Both corn and soybeans posted their biggest daily declines
since January.	
    "Today is a corrective trade," said Shawn McCambridge,
grains analyst with Jefferies Bache in Chicago. "You have a
market that was overbought going into yesterday's session. The
market has little (supportive) fundamental information coming
in," McCambridge said.	
    Traders estimated that commodity funds had sold some 18,000
Chicago Board of Trade corn contracts, along with 7,000 soybean
contracts and 2,000 wheat. 	
    On Monday, all three markets posted downside reversals, with
the front contracts closing lower after setting higher highs and
lower lows than the previous session. Soybeans were retreating
after hitting a six-month high on Monday. 	
    Some interpreted the reversals as bearish signals that the
markets had peaked, at least for the time being.	
    "Given the 'reversal' in the grains yesterday, we are going
to exit the entire position this morning," commodities investor
Dennis Gartman wrote in his daily newsletter to clients.	
    Gartman told Reuters in a telephone interview that he sold a
"very large" position in corn and sold a small number of
positions in soybeans. He said he did not have positions in
    CBOT corn for May delivery settled 16 cents lower at
$6.47-1/2 a bushel while May soybeans ended down 21-1/2
cents at $13.45 a bushel. May wheat ended down 9-3/4 cents
at $6.42-1/2.	
    Open interest in CBOT soybeans has risen nearly 40 percent
so far in 2012, and weekly CFTC data shows the net long position
held by commodity funds at a 13-month high, leaving the market
ripe for a bout of long liquidation.	
    "The biggest issue that worries me in beans is the size of
the long fund position," said Dale Durchholz with Agrivisor in
Bloomington, Illinois. "If the bean market falters, the thing
you really need to worry about is (whether) could we end up
putting the bean market into a liquidation break," Durchholz
    Traders noted unusually mild weather in the U.S. Midwest
this week that should favor early planting of corn and soybean
crops. Rain showers expected across parts of the U.S. Plains and
Midwest should benefit the developing winter wheat crop.	
    "I don't see anything fundamentally, other than favorable
Northern Hemisphere weather," Dan Basse, president of AgResource
Co in Chicago, said of the weak tone in the grain markets.	
    He said traders were adjusting positions ahead of key
reports from the U.S. Department of Agriculture next week on
U.S. planting intentions and quarterly grain stocks.	
    "We've got (USDA) reports next week, and the weather is
favorable. Maybe we have digested much of the South American
crop losses, and we're focused more on Northern Hemisphere
weather," Basse said.	
    The market was anticipating an increase in U.S. corn
plantings from last year and little change in U.S. soybean
    Worries about a slowing pace of economic growth in China,
the world's biggest soy importer, added pressure. BHP Billiton
, the world's biggest miner, said on Tuesday it was
seeing signs of "flattening" iron ore demand from China.
    Investors were watching a strike by Argentina's truckers,
who are seeking higher pay, that disrupted the flow of corn and
soybeans to the country's main ports for a second day on
 Prices at 2:48 p.m. CDT (1948 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  647.50   -16.00  -2.4%    0.2%
 CBOT soy                  1345.00   -21.50  -1.6%   12.2%
 CBOT meal                  365.60    -5.30  -1.4%   18.2%
 CBOT soyoil                 54.33    -1.07  -1.9%    4.3%
 CBOT wheat                 642.50    -9.75  -1.5%   -1.6%
 CBOT rice                 1436.50   -24.00  -1.6%   -1.6%
 EU wheat                   208.50    -2.00  -1.0%    3.0%
 US crude                   105.68    -2.48  -2.3%    6.9%
 Dow Jones                  13,165      -74  -0.6%    7.8%
 Gold                      1647.51   -12.89  -0.8%    5.4%
 Euro/dollar                1.3216  -0.0021  -0.2%    2.1%
 Dollar Index              79.6550   0.2030   0.3%   -0.7%
 Baltic Freight                884        5   0.6%  -49.1%
 (Additional reporting by Naveen Thukral in Singapore and
Svetlana Kovalyova in Milan; Editing by Bob Burgdorfer,
Marguerita Choy and David Gregorio)

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