U.S. corn futures are expected to start trading lower Monday on forecasts for cooler temperatures to ease stress on the crop.
Traders predict corn for December delivery, the most actively traded contract, will open 12 cents to 14 cents a bushel lower at the Chicago Board of Trade. In overnight electronic trading, the contract dropped 14 1/2 cents, or 2.1%, to $6.70 1/2 a bushel.
Prices are coming under pressure as concerns about crop damage from a Midwest heat wave are diminishing. Meteorologists are calling for temperatures, which soared during the weekend, to moderate by the end of the week.
"There definitely will be some relief starting Thursday," said Don Keeney, senior agricultural meteorologist at Cropcast Ag Services, a division of private weather firm MDA EarthSat Weather.
Traders are paying close attention to the weather because farmers need favorable conditions to grow a big crop to replenish low inventories. Prices have pulled back 14% since reaching an all-time high in early June on supply concerns. Yet, users of corn remain nervous about threats to the crop.
Prices neared a one-month high last week as temperatures began to climb. Meteorologists at private weather firm Telvent DTN agreed "some relief from the high temperatures is possible by the coming weekend." They added "well above-normal daytime and night time temperatures will put extreme stress" on the corn crop during the next three to five days.
Money managers have rebuilt bullish positions in the corn market recently amid concerns about crop threats and fears of smaller supplies. Large managed funds, including hedge funds, increased their net long position in corn futures and options by 13% to 216,070 contracts in the week ended Tuesday, the most recent period in which data is available from the U.S. Commodity and Futures Trading Commission.
Additional pressure on prices comes from strength in the dollar and concerns about Europe's debt problems. A firm dollar often weighs on the grain markets because it makes U.S. commodities less attractive to foreign buyers.