Corn futures drop on dollar strength, improving U.S. harvest

Investing.com – Corn futures were down on Tuesday, falling to a four-day low as a broadly stronger U.S. dollar and easing concerns over the U.S. corn crop harvest dragged down prices.

On the Chicago Mercantile Exchange, corn futures for December delivery traded at USD6.3463 a bushel during European morning trade, tumbling 1.85%. 

It earlier fell by as much as 2% to trade at USD6.3413 a bushel, the lowest price since October 26.

The U.S. Department of Agriculture said in its weekly crop progress report published after markets closed Monday that approximately 78% of the U.S. corn crop was harvested as of October 30, up from 65% in the preceding week and higher than the five-year average of 62% for this time of year.

In Iowa, the largest corn-growing state in the U.S., 87% of the crop was harvested, compared to the five-year average of 56%. In the second largest U.S. corn grower Illinois, 89% of the corn crop was harvested, up from 79% in the preceding week.

The U.S. produced 38% of the world's corn last year, making it the both world’s largest corn producing nation and the largest exporter of the grain.

Corn futures came under further pressure after data released earlier showed that China's official purchasing managers' index for October fell to the lowest level since February 2009, triggering fears over the health of the world’s largest corn consumer.

A broadly stronger U.S. dollar also contributed to losses, as appetite for riskier assets was weighed after Greek Prime Minister George Papandreou said that a referendum will be held on the latest aid proposals for the debt-laden country, adding to nervousness over the region’s debt crisis.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, rallied for a second day, climbing 0.99% to trade at a seven-day high of 77.41.

A stronger dollar reduces the appeal of U.S. crops to overseas buyers and makes commodities less attractive as an alternative investment.

Elsewhere on the Chicago Mercantile Exchange, wheat for December delivery slumped 1.32% to trade at USD6.1913 a bushel, while soybeans for January delivery fell 1.14% to trade at USD12.0313 a bushel. 

According to USDA data, approximately 89% of the U.S. winter wheat crop had been planted as of last week, in line with the normal seasonal pace of 88%.

The U.S. soybean harvest was 87% complete, according to the USDA, up from 80% the week before and above the five-year average of 79% for this time of year.