U.S. corn futures are expected to retreat in early trade, stumbling on fresh investor liquidation in commodities, with plunging crude oil and precious metal futures laying the ground work for broad based selling.
Analysts expect corn to open with old crop contracts down 5 cents to 7 cents, and new crop futures down 2 cents to 3 cents. In overnight electronic trading, the most-active July contract was down 7 cents or 1% at $7.22 1/2 a bushel, and Dec corn was down 1 1/2 cents or 0.2% at $6.63 3/4.
"The market mantra is that traders are getting smaller in their exposure to commodities following recent windfall profits and historically high prices," according an AgResource Co. market note.
The drop in the value of energies, metals and other Ag markets such as meats has also pressured grains, AgResource added in the note.
The uncertainty of weather forecasts is driving futures, with traders closely eyeing Midwest conditions because farmers need good weather to grow a large crop to replenish inventories. Concerns about strong demand draining supplies recently pushed prices to a record high of $7.83 3/4 a bushel last month.
Earlier corn planting is typically better for final yields, as it reduces the chance the crop will still be developing when the season's first frost hits.
Weather forecasts indicate farmers will continue to struggle to plant the crop in the eastern belt and Delta, yet actively sow crops in the western belt. Rains are expected to keep soils soggy in the eastern Midwest and in the Mississippi Delta.
Worries about a slow start to planting are elevated because inventories are projected to fall to a 15-year low before next fall's harvest.
The Telvent DTN weather forecast said heavy rains look to shift northward during the next 3-5 days, taking the pressure off the flooded areas of the eastern and southern Midwest and Delta region. However, this heavier rain may shift back to the south again during the 6-10 day period, likely meaning continued delays to spring field work and planting, Telvent said.
U.S. Department of Agriculture export sales data should add to the defensive market theme, analysts said. Total sales for the week ended April 28 were 284,200 met of 349,000 tons for delivery before the end of the crop's marketing year on Aug. 31 were down 19% from the previous week and 53% from the prior four-week average.
Futures garnered mild support on Wednesday from rumors that exporters were loading cargoes of corn for China delivery. State grain stockpiler China Grain Reserves Corp. confirmed China has begun loading cargoes from a 1 million-metric-ton purchase of corn it made from the U.S. in March, a company spokesman said Thursday.
USDA in March reported sales of 1.25 million tons of corn to unspecified designation, triggering market talk that China was buying to replenish state reserves. But Sinograin, as the company is known, currently has no plans to import more corn, Cheng Bingzhou told Dow Jones Newswires by telephone.