U.S. corn futures are expected to start lower Tuesday on talk early harvest results are better than expected.
Traders predict corn for December delivery, the most actively traded contract, will open down 3 cents to 5 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract slid 5 cents, or 0.7%, to $7.40 1/2 a bushel.
Pushing prices down is chatter about higher-than-expected yields in the Midwest. The corn harvest is beginning in the region, with "some talk of better than expected early harvest yields," according to Doane Advisory Services, an agricultural advisory firm in St. Louis.
Traders are paying close attention to output because of concerns about historically low inventories. A larger-than-expected harvest could help ease tight supplies, although it's still unknown what the final size of the crop will be.
Futures prices already have surged this summer on fears about shrinking supplies, with corn for December delivery hitting a high in late August of nearly $7.80 a bushel. Prices have since pulled back but remain up nearly 20% since July.
The focus of the market is shifting away from the big-picture production and inventory issues that have supported prices and toward "the seasonal reality of an approaching harvest" that will bring in billions of bushels of corn, said Duane Lowry, analyst for Early Market News. The U.S. Department of Agriculture, in a monthly crop report issue Monday, cut its forecast for output 3.2% to 12.5 billion bushels but still projected farmers will harvest the third largest crop in history.
"Early corn yield reports [are] starting to come out of Iowa, with most better than expected," said Doug Bergman, broker for MF Global in Chicago.
The USDA, in a weekly crop report Monday, surprised traders by raising its good-to-excellent rating for the crop by one percentage point from last week to 53%. The government did not issue data on how much of the harvest had been completed.