CHICAGO (Dow Jones)--U.S. corn futures drifted lower Tuesday, setting back from Monday's rise to 1-month highs as traders took profits in an effort to reduce risk exposure in the market.

CBOT corn for March delivery, the most-active contract, slipped 1 1/4 cent, or 0.2%, to $5.87 1/4 a bushel.

After prices rallied 2.5% Monday, a one-month high and up nearly 14% in the past three weeks, traders were content to book some profits in the absence of any fresh drivers to attract buyers, analysts said.

A lack of any new visible export business coupled with spillover weakness from sharp declines in wheat futures served as negative influences to weigh on prices, said Terry Reilly, analyst with Citigroup Global Markets Inc. in Chicago.

Corn and wheat are linked as both are used in animal feed. The unwinding of long wheat/short corn spread positions limited losses in corn, as traders reduced exposure in wheat amid improved weather conditions for crops in the Middle East wheat belt.

Corn had previously lost value to wheat on fears increased poor quality global wheat supplies would cut into feed demand for U.S. corn.

Volatility in the U.S. dollar, and concerns surrounding tax credits for ethanol provided further uncertainty to entice traders into reducing some risk in seasonally quiet preholiday markets, Reilly added.

Strong demand for corn from the ethanol industry remains a draw on corn inventories, and industry analysts are hopeful the extension of a blender's tax credit will continue that strong demand.

Market participants also are uncertain about production prospects in Argentina, the world's second largest corn exporter after the U.S. Growing areas have been too dry recently and the below-normal rainfall pattern is likely to continue.

Rainfall deficits of three to six inches now exist in key corn areas of Argentina as pollination begins, T-storm Weather reported in a midday forecast. Marginally-helpful amounts of rain forecast for the weekend will need to be heavier than is currently forecasted to help offset previous dryness, T-storm said in the forecast.

CBOT oat futures settled lower, stumbling with other grains as traders reduce risk exposure in the market. March oats settled 6 cents or 1.5% lower at $3.85.

Ethanol futures finished higher, drawing support from supportive demand outlooks. January ethanol ended $0.003 or 0.1% higher at $2.161 a gallon.

--By Andrew Johnson Jr., Dow Jones Newswires, (312) 347-4604