U.S. corn futures are expected to tumble early Tuesday after the government failed to confirm exporters struck deals to sell grain to China.
Traders predict corn for May delivery, the most-actively traded contract, will open 8 to 10 cents a bushel lower at the Chicago Board of Trade. In overnight electronic trading, the contract dropped 10 cents, or 1.4%, to $6.76 1/2 a bushel.
Market participants are set to take profits after the U.S. Department of Agriculture did not confirm export sales of corn following widespread talk of unexpected purchases by China last week. Chatter about the deals rallied prices and renewed concerns about supplies, which are projected to reach a 15-year low this year.
"Without confirmation of a purchase, corn appears overvalued," said Brian Hoops, president of Midwest Market Solutions, a brokerage firm in South Dakota.
Corn futures have climbed more than 11% since Thursday, when talk about sales to China erupted after the USDA said private exporters struck deals to sell 116,000 tons of corn for delivery to unknown destinations. The government announced another sale of 116,000 tons to unknown destinations Monday.
Many traders suspected the buyer was China and that China may continue buying to replenish supplies. However, analysts said the unknown buyer could be another country, such as as South Korea or Mexico. Often a U.S. exporter agrees to sell a commodity to an intermediary that has not yet settled the final foreign destination of the commodity.
The initial talk about sales to China had breathed new life into corn following a sell-off fueled by concerns about the world economy and reduced demand from Japan, the world's top corn importer. Corn futures have lost 8% since reaching a 32-month high earlier this month on supply concerns.
Deferred futures contract months could continue to gain on the nearby contract due to concerns U.S. farmers may not expand plantings enough this spring to replenish supplies, traders said. Forecasters predict wet weather may disrupt planting this spring and push growers to sow more soybeans, which are planted later in the spring than corn.