U.S. corn futures are expected to retreat Tuesday, backpedaling from recent gains on global economic worries and stable crop-condition ratings.
Analysts expect corn to open down four cents to six cents. In overnight electronic trading, the most-active December contract was down 6 3/4 cents or 0.9% at $7.13 1/4 a bushel.
Profit-taking is set to weigh on prices, as corn's recent bounce to new highs is overridden by fears of a slowing global economy, amid weaker growth in Europe's biggest economy, Germany, said Mike Zuzolo, president of Global Commodity Analytics and Consulting.
This weaker growth produced new all-time highs in gold, and broader based declines in equities, crude-oil and grain futures, Zuzolo added.
A slower global economy would raise doubts that the U.S. could meet the demand projections government forecasters current peg, particularly with prices historically high, said John Kleist, analyst with ebottrading.com.
Traders are also looking at Monday's weekly crop-progress reports from the U.S. Department of Agriculture, in which U.S. corn-crop ratings stabilized in the past week, reflecting the more-favorable cooler, wetter crop conditions Midwest crops face, the USDA confirmed. The department, in a weekly crop report, left its good-to-excellent rating for corn at 60%.
The stable crop ratings reflect the impact of weather on crops, particularly at a time of year when ratings usually decline as plants near maturity.
However, uncertainty surrounding U.S. crop potential will continue to provide support, as the market remains sensitive to yield and production cuts, with demand forecast to eat away at smaller 2011 production. Stressful heat in July drained yield potential from the U.S. crop, a feature leading the USDA to cut its estimates for corn crops due to weather issues.
"The steady corn ratings on a national basis look favorable for crop potential, but still support ideas yields were damaged in the July heat wave," said Shawn McCambridge, senior grains analyst with Jeffries/Bache in Chicago.
With key individual states showing declines in ratings, the USDA's 153-bushel-an-acre corn yield looks overstated, McCambridge said.
Sixty seven percent of corn crops in Iowa are rated in good to excellent condition, down six percentage points from last week. Indiana and Nebraska corn crops deteriorated by two and four percentage points, respectively.
The key problem for price direction is a lack of fresh supportive news to extend recent gains, as traders have digested last week's tighter supply forecasts from government forecasters, according to a market letter from agricultural research firm AgResource Co.
"The market needs either confirmation of smaller yields or better demand to sustain the recent rally," AgResource added.