Rain comes, corn prices fall and hit a market limit

Chicago Board of Trade corn futures sank by the daily exchange-imposed limit on Tuesday as forecasts for cool, wet weather in U.S. growing areas eased concerns about unfavorable crop conditions.

The market pulled back after climbing 12% last week on lower-than-anticipated U.S. planting estimates from the Department of Agriculture.

The estimates, issued on Wednesday, made futures more sensitive to dryness in northern and western portions of the U.S. crop belt.

It is difficult for agricultural markets to rally with largely favorable Midwest weather seen into mid-July, said Rich Feltes, head of market insights for broker R.J. O'Brien. Farmers' lower-than-expected plantings are being overshadowed by the potential for above-average yields across 75% of the U.S. growing area, he said.

The favorable weather outlook, if realized, will ease stress on corn crop just as it passes through its key yield-determining stage of pollination.

"There is little question over the wetter outlook for this week that is expected to provide beneficial rains to some of the driest areas of Iowa, Minnesota and the Dakotas, while also reducing heat risks for the region," said Arlan Suderman, chief commodities economist for broker StoneX.

At midmorning Tuesday, CBOT corn futures had fallen by the daily 40-cent limit in every contract month through July 2022.

"In the Corn Belt, showers and thunderstorms crossing Minnesota and the Dakotas are providing beneficial moisture for drought-affected corn and soybeans," the USDA said in a daily weather report.

Later Tuesday, the USDA reported that, in a survey for the week ending Sunday, 15% of Minnesota's corn acreage was in poor or very poor condition, up from 11% in the week-earlier survey. And 14% of the state's soybean acreage was in poor or very poor condition, also up from 11% a week earlier.

The state's pasture land continued to be more adversely affected by the drier and hotter conditions that prevailed in the Midwest for much of June. The USDA's latest weekly survey found that 47% of Minnesota's pasture acreage was in poor or very poor condition, up from 44% a week earlier.