U.S. corn futures are expected to start sharply lower Thursday as increasing concerns about the economy spark widespread selling of commodities and equities.
Traders predict corn for December delivery, the most actively traded contract, will open down 19 cents to 22 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract sank 19 3/4 cents, or 2.9%, to $6.66 a bushel.
Driving prices lower is the Federal Reserve's downbeat assessment of the U.S. economy. The Fed Wednesday warned of "significant" downside risks to the economy, fueling a global sell-off that has engulfed the grain markets.
"Commodity prices are very weak as the markets become more and more concerned about the prospects for global weakness rather than even modest global growth," said Dennis Gartman, publisher of the Gartman Letter, a daily financial newsletter.
Losses on Thursday will add to the recent setback in the corn market. Futures prices have pulled back nearly 17% since the nearby contract reached an all-time high near $8 a bushel in June. Prices surged this summer on concerns about tightening supplies and pulled back on profit-taking and reports of better-than-expected harvest results.
The decline in prices should attract grain users to the market because inventories of corn are still considered tight. South Korea's animal feed millers have already purchased at least eight cargoes of corn totaling 415,000 metric tons in the last three days. Yet, "even the fundamentally tight situation in corn cannot withstand the pressures from outside the market," Gartman said.
Weekly U.S. corn export sales, reported Thursday by the U.S. Department of Agriculture, were not strong enough to support the market, traders said. Sales of 598,100 metric tons for the week ended Sept. 15 were within traders' expectations for 400,000 to 900,000 tons. Top buyers included Japan and Mexico, traditionally two of the top importers of U.S. corn.