Corn fell for the first time in two weeks on speculation that investors are liquidating positions after the July contract fell through key technical levels.
Futures for July delivery dropped below the 50-day moving average of $3.6175 a bushel and the 40-day moving average of $3.60375 a bushel, said analyst Jerry Gidel. The price then dropped through the 30-day moving average of $3.58 a bushel. As prices declined past each technical level, automatic sell orders were triggered, Gidel said.
“Pulling back below Friday’s close is surprising to me,” said Gidel, a market analyst at North American Risk Management Service in Chicago. “Maybe we were a little optimistic and got overenthusiastic this morning” after China said on June 19 that it would end the yuan’s peg to the dollar, he said.
Corn futures for July delivery fell 5.75 cents, or 1.6 percent, to $3.55 a bushel on the Chicago Board of Trade.
Futures for December delivery, the most-active contract, fell 5.75 cents, or 1.5 percent, to $3.7475 a bushel. Before today, the price had gained 13 percent since June 7, the last time futures settled lower.
Futures earlier rose as much as 1.7 percent on speculation that demand would improve after China said it would no longer peg the yuan at 6.83 to the dollar. The price couldn’t hold after breaking through the technical levels, Gidel said.
“It looks like we have a bunch of panicking here,” Gidel said. Speculative investors “just follow the charts, and if the charts don’t do what they expect them to do, they flee the scene. The price backed off, and when it couldn’t settle against the moving averages, everybody went out the side door.”
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, government figures show. The U.S. is the biggest user of the grain.