CBOT corn futures plunged Tuesday, which stifled US ethanol trading activity, sources said.
The front-month CBOT corn futures contract traded as low as $3.3375/bushel in intraday activity, 19.25 cents below Friday's settle of $3.53/bu.
A market participant said CBOT corn futures came under pressure following weekend rain in the Midwest and a forecast for precipitation in the eight-to-14 days hence period from the US National Weather Service.
Another source said corn will be in the pollination phase during this week and the next, with the precipitation increasing yields.
The higher yield forecast saw corn market participants move to short positions from long positions, driving down prices.
Corn prices reached a two-year high of $4.3775/bu on June 17 as weather forecasts showed dry weather in the Corn Belt that would threaten corn growth. But since then, rain and mild temperature have seen the forecast yield rebound and prices tumble 19.30%.
"People are kind of sitting on the sidelines waiting for corn to settle down," said one ethanol source.
Chicago Argo, a benchmark for physical US ethanol, was heard Tuesday in a bid-offer range of $1.55-$1.59/gal. The product was assessed at $1.6125/gal Friday.
