Profit-taking is expected to weigh on U.S. corn futures in early trading Tuesday, although increasing concerns about cool, wet weather delaying plantings should limit losses.
Traders and analysts predict corn for July delivery, the most-actively traded contract, will start 4 to 6 cents a bushel lower at the Chicago Board of Trade. In overnight electronic trading, the contract dropped 4 1/4 cents, or 0.6%, to $7.64 1/4 a bushel.
Market participants are taking money off the table after prices climbed more than 3% Monday on worries planting was behind schedule, a situation that was later confirmed by the government. The decline should be short-lived, analysts said, as weather forecasts show unfavorable conditions will continue to slow planting into early May.
"A soggy and cool picture continues to concern the corn market," Wisconsin-based risk-management firm Stewart Peterson told clients in a note.
Traders are on edge about planting delays because the country needs to grow a large corn crop to replenish inventories, which are projected to reach a 15-year low before harvest next fall. Nearby corn futures recently reached record highs on concerns about strong demand draining supplies and are about 3% below that level.
The U.S. Department of Agriculture, in a weekly crop-progress report issued Monday, said 9% of the corn crop was sown as of Sunday, below the average of 23% for that time of year. That means it is "a given" the corn planting pace this year as of May 1 will be among the three slowest ever, according to Freese-Notis Weather, a private forecaster.
Planting will likely only be 11% to 15% complete in next Monday's report, Freese-Notis said. Since 1985, the only years with slower progress were 1993, when farmers were 8% finished with corn planting on May 1, and 1995, when farmers were 11% finishes as of May 1, according to the firm.
"I think that it is quite possible that the national planting pace would be 30% done or less as of May 8, which would keep this year among the three slowest ever since 1985," Freese-Notis said.
In other news, grain futures could feel some pressure from concerns China may continue its pattern of monetary tightening to fight inflation, analysts said. Traders have reduced risk in commodity markets amid uncertainty about the move.