U.S. corn futures are expected to start lower Thursday on signs high prices are slowing demand for the grain.
Traders predict corn for December delivery, the most actively traded contract, will open down 8 cents to 12 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract dropped 7 3/4 cents, or 1%, to $7.59 3/4 a bushel.
Driving prices lower are concerns about slowing demand from foreign buyers and ethanol producers. Data issued Thursday by the U.S. Department of Agriculture showed export sales were lackluster at 637,000 tons during the week ended Aug. 25. The news came after the Department of Energy on Wednesday said ethanol production last week dropped 1.7% to 888,000 barrels a day.
"The theme is that we have higher prices slowing down demand," said Don Roose, president of U.S. Commodities.
Traders are keeping a close eye on the impact of prices on demand because the December corn contract has climbed to fresh highs during the past week. Prices have advanced on worries the upcoming harvest will fall short of expectations.
Farmers are nervous about the harvest because they are uncertain how much damage was caused to the crop by intense heat and dryness this summer. Analysts have slashed their output forecasts in anticipation the USDA will cut its crop outlook in a report due Sept. 12.
"The demand pace is what we're really looking at because we're not sure of the supply," Roose said.
Still, the uncertainty about output should prevent prices from falling too far, with Roose saying the market was in a "bend but not break mode." Traders are waiting to see updated crop estimates from brokerage firm INTL FCStone after the close of trading Thursday and from private analytical firm Informa Economics on Friday.