U.S. corn futures are expected to start lower Thursday as strength in the U.S. dollar and broad selling of commodities pressure prices.
Traders predict corn for July delivery, the most actively traded contract, will open 10 cents to 18 cents a bushel weaker at the Chicago Board of Trade. In overnight electronic trading, the contract dropped 17 1/2 cents, or 2.6%, to $6.59 3/4 a bushel.
Corn is weakening with crude oil, precious metals and other grains amid widespread selling of commodities and gains in the dollar. A strong dollar often weighs on U.S. commodities because it makes them less attractive to foreign buyers. Losses in crude oil set a negative tone for the grains because ethanol is made from corn and funds often trade in a basket of commodities.
"Commodity-wide fund selling weighed on prices," said Brian Hoops, president of Midwest Market Solutions, a commodities brokerage in South Dakota.
Losses in corn Thursday would follow a limit-down fall Wednesday. Prices tumbled under pressure from weak external markets and a larger-than-expected inventory projection from federal forecasters.
The U.S. Department of Agriculture on Wednesday estimated corn inventories would be 730 million bushels as of Aug. 31, up 8% from its April estimate and above traders' expectations. The forecast eased concerns about supplies that drove corn prices to record highs last month. The market pulled back nearly 16% from the highs.
"Further weakness was seen in agricultural commodities across the board due to weakness in outside markets," said Jason Holthaus, analyst for Country Hedging, a brokerage in Minnesota.
Yet, supply concerns linger in the market, as season-end inventories are projected to reach a 15-year low this year and stay tight next year due to strong demand. Traders are keeping an eye on weather forecasts because farmers need favorable conditions to grow a large crop to rebuild inventories.
Warmer temperatures have helped farmers plant corn in the eastern and southern Midwest and Delta recently. However, they will last only another couple of days, while showers move in to the region Thursday, according to Telvent, DTN a private weather firm. Drier weather is possible next week, the firm noted in a forecast.