* U.S. farmers set weekly planting record of 41.8 mln acres
* Corn drop pushes wheat to seven-week low
* Spot soybeans have risen 4.5 pct during four-day rally
(Updates with closing prices, adds new analyst quote)
By Mark Weinraub
CHICAGO, May 21 (Reuters) - U.S. corn futures dropped 1.5
percent, to their lowest since early April, on Tuesday as
investors unwound bull spreads following a record planting pace
last week that encouraged farmers to sell some old-crop supplies
to ease cash market tightness, traders said.
A surge in corn planting progress during the past week eased
farmer concerns about needing to hold onto supplies held in
storage bins since last fall's harvest. That relieved some
pressure that supported old-crop contracts this past month.
"As the farmers get the crop planted, they are more
interested in moving some old-crop inventory," said Chad
Henderson, grain market advisor with Prime Agricultural
Consultants. "You probably had a pick-up in farmer sales,
especially as guys got chased out of the field."
Wheat futures also fell, hitting a fresh seven-week low on
pressure from the drop in corn prices. Soybeans were mixed, with
the front-month July contract edging to a three-month high while
deferred months weakened.
Investors have been building up bull spreads - buying
old-crop contracts and selling deferred months - in corn as
supplies ran thin at processors and elevators around the U.S.
Midwest. A weakening corn basis in some places provided a reason
for some unwinding of those positions even as demand in the
ethanol market remained firm.
"Bull spreaders have been working pretty aggressively and I
think there are some that are starting to pull the trigger on
coming out of a few of those," said Jason Britt, president of
Central States Commodities in Kansas City. "You get a little
Chicago Board of Trade July corn futures settled down
9-1/2 cents at $6.40 a bushel. Prices bottomed out at $6.32-1/2,
the lowest level for the front-month contract since April 8.
The new-crop December contract was unchanged at
$5.20-1/4 a bushel. Prices had fallen to $5.12 during overnight
U.S. growers took advantage of mostly clear skies last week
to plant corn at a blistering pace, pushing progress to 71
percent from 28 percent a week earlier, the U.S. Department of
Agriculture said in a weekly report on Monday afternoon.
The sowing progress topped exceeded analyst estimates in a
Reuters survey that went from 59 to 70 percent.
The increase of 43 percentage points indicates that farmers
in the world's biggest corn producer seeded a single-week U.S.
record of 41.8 million acres.
"It is unbelievable how quickly they can plant corn in the
U.S. which is putting pressure on prices," said Stefan Meyer, a
manager for cash markets at brokerage INTL FCStone in Sydney.
Despite the big week, farmers were still behind schedule,
which kept a floor under new-crop prices. The five-year average
for this time of May is 79 percent planted and some rain this
week could cause delays to the final push of seeding.
CBOT July wheat ended down 4-3/4 cents at $6.80-1/2 a
bushel, hitting its lowest since April 3 during the session.
Soybeans were mixed, with the old-crop July contract up
13-3/4 cents at $14.78-1/4 a bushel while new-crop November
dropped 4-1/4 cents to $12.20-3/4 a bushel.
Britt said there was talk that an investment fund was
unwinding its contrarian bear spread position, which kept the
front-month supported even as new-crop contracts weakened.
Prices at 2:17 p.m. CDT (1917 GMT)
LAST NET PCT YTD
CHG CHG CHG
CBOT corn 638.25 -11.25 -1.7% -1.3%
CBOT soy 1477.00 12.50 0.9% 23.2%
CBOT meal 438.70 3.40 0.8% 41.8%
CBOT soyoil 49.48 0.28 0.6% -5.0%
CBOT wheat 680.50 -4.75 -0.7% 4.3%
CBOT rice 1517.50 0.50 0.0% 3.9%
EU wheat 204.00 0.75 0.4% 0.7%
US crude 95.89 -0.55 -0.6% -3.0%
Dow Jones 15,407 72 0.5% 26.1%
Gold 1375.06 -17.98 -1.3% -12.1%
Euro/dollar 1.2908 0.0026 0.2% -0.3%
Dollar Index 83.8220 0.0860 0.1% 4.5%
Baltic Freight 830 -6 -0.7% -52.2%
In U.S. cents, benchmark contracts, except EU wheat (euros) and
soymeal (dollars). CBOT wheat, corn and soybeans per bushel,
rice per hundredweight, soymeal per ton and soyoil per lb.
(Editing by James Dalgleish and Bob Burgdorfer)