Chicago corn posts biggest drop in three weeks after prolonged rally

Chicago corn futures fell the most in around three weeks on Wednesday as traders took profits following a prolonged rally. The most-active contract dropped as much as 1.8%, marking its biggest intraday decline since August 13. Wheat and soybeans also moved lower.

Grain prices have rallied in recent weeks amid geopolitical and weather risks. Attacks on Black Sea ports and vessels have threatened supplies, while hot weather has worsened crop prospects in several regions. In August, the Bloomberg Agriculture Spot Index, which tracks 10 major agricultural commodities, jumped more than 13%, its biggest monthly gain since July 2012.

The rally also attracted substantial speculative buying. According to CFTC data, hedge funds’ bullish bets on corn reached a four-year high last week. The large build-up of speculative positions has made the market more vulnerable to profit-taking, although analysts said the broader price outlook remains bullish.

Wheat had reached fresh highs a day earlier amid talks between Turkish President Recep Tayyip Erdogan and Russian President Vladimir Putin over the situation in the Black Sea and a potential revival of the UN-backed grain deal. No agreement was announced after the meeting. Grain and oilseed markets have also recently been supported by escalating US-Iran tensions and higher crude oil prices.

Analysts noted that grain markets remain highly sensitive to geopolitical headlines, resulting in sharp price swings. Wednesday’s decline came despite another attack on Odesa, suggesting that a substantial war-risk premium has already been priced into the market following the August rally.

Tags: Chicago, corn, prices, futures