Profit-taking is expected to drive down U.S. corn futures Tuesday as the market pulls back from recent gains.
Traders predict corn for December delivery, the most actively traded contract, will start trading down 8 cents to 10 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract fell 9 3/4 cents, or 1.3%, to $7.60 1/4 a bushel in a turnaround from a surge to new highs Monday.
Traders are taking money off the table despite concerns the upcoming harvest will fall short of expectations due to damaging heat and dryness. Prices retreated overnight even though the U.S. government, in a weekly report Monday, reduced its good-to-excellent rating for the corn crop by three percentage points from last week, a larger-than-expected cut.
Grain users are nervous about crop conditions because strong demand has drained U.S. inventories to historically low levels. Yet, "the desire to take profits overwhelmed" concerns about supplies, wrote analysts for AgResource Company, an agricultural consultancy in Chicago.
It is difficult to sustain the market for December corn near $8 a bushel because users of the grain reduce their demand at lofty prices, analysts said. The U.S. Department of Agriculture on Monday reported 27.3 million bushels of corn were inspected for export in the week ended Thursday, down from 32.1 million a week earlier and below traders' expectations.