U.S. corn futures are expected to open lower Wednesday, as the condition of the U.S. crop improves and the dollar strengthens.
Traders predicted corn for December delivery, the most actively traded contract, will start 4 cents to 6 cents lower at the Chicago Board of Trade. In overnight electronic trading, the contract fell 5 3/4 cents, or 0.9%, to $6.06 3/4 a bushel.
Declines may be limited by continued export demand as the U.S. Department of Agriculture reported sales to Egypt and South Korea, and traders await confirmation of additional sales to China.
Still, corn futures are expected to remain under pressure, continuing a sharp pullback from record highs as the outlook for the upcoming crop improved. The USDA reported after Tuesday's market close that the condition of the domestic corn crop improved over the last week. The government said 69% of the corn crop was in good-to-excellent condition, up one percentage point from a week ago. The report was in line with the expectation of analysts, yet growth in the excellent category surprised some.
Corn-belt weather continues to look favorable for the current crop, with forecasts showing the warmth needed for development, but not the searing heat that can crimp growth, said Sterling Smith, an analyst with Country Hedging.
"We are kind of right in the sweet spot where we need to be," he said.
Analysts expected corn to come under additional pressure Wednesday as some traders sold positions to book profits after a jump in prices Tuesday. Strength in the U.S. dollar also is expected to fuel broad selling of commodities as a strong dollar curbs the purchasing power of foreign buyers. The dollar gained as concerns over the European sovereign-debt crisis shifted to Portugal and as China raised interest rates.
"Corn should encounter profit-taking today on the heels of Tuesday's rally, with traders finding little bullish news to spur buying this morning," wrote Bryce Knorr, an analyst with the agricultural publication Farm Futures, in a morning report.
Still, export demand continues to show signs of strengthening after a deep slide in prices following record highs of nearly $8 bushel in early June. The USDA on Wednesday said private exporters reported sales of 120,000 metric tons of last year's crop to Egypt and 225,000 metric tons of the upcoming crop to South Korea. Grain traders still await confirmation of sales to China amid talk the country recently bought 500,000 metric tons. They expect China will be listed as "unknown destinations" in upcoming sales announcements.
--Tom Polansek contributed to this article.