U.S. corn futures are expected to start weaker Wednesday as traders take profits following a surge to contract highs.
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 retreated 4 1/2 cents, or 0.6%, to $7.70 3/4 a bushel after closing at a fresh high Tuesday.
Traders are taking money off the table ahead of the end of the month and the three-day holiday weekend in the U.S. Still, they remain concerned the upcoming corn and soy harvests will fall short of expectations due to damaging heat and dryness.
Uncertainty about the size of the fall harvests is keeping traders on edge as grain users were hoping for large harvests of corn and soybean to replenish low inventories of the crops. Strong global demand for U.S. farm products has left supplies at historically low levels.
"We remain positive on corn and soybean price prospects," wrote analysts for Barclays Capital.
Lingering concerns about damage from the stressful summer weather should limit losses in the market. Prices finished higher Tuesday after initially trading lower on profit-taking.
Traders and grain users are nervous because crops were hit hard by unfavorable weather this summer, with corn suffering due to intense heat and dryness in July and August. Analysts have been downgrading their output forecasts in response.
"There are a lot of buyers in this market on pullbacks," said Larry Glenn, broker and analyst for Frontier Ag, a commodities brokerage in Kansas.
Traders will wait to see updated crop estimates from brokerage INTL FCStone on Thursday. The U.S. Department of Agriculture will issue its next crop forecasts Sept. 12.