Profit-taking drove U.S. corn futures lower Wednesday after the market stretched to a fresh 32-month high.
Nearby corn for March delivery settled down 13 1/4 cents, or 1.8%, at $7.14 a bushel following a leap to $7.32 1/2 at the Chicago Board of Trade. Corn for May delivery, the most-active contract, dropped 14 cents, or 1.9%, to $7.21 1/2 a bushel.
Futures retreated despite ongoing concerns about supplies but should quickly recover to reach new highs, traders said. The market has rallied 125% since June on tight supplies, surging recently in an attempt to slow demand and encourage farmers to sow more acres this spring.
"The underlying supply-and-demand situation is obviously quite bullish," said Joel Karlin, analyst at Western Milling.
Still, farmers are widely expected to significantly increase plantings as corn looks more profitable to produce than soybeans, which are planted around the same time as corn and in many of the same areas. The U.S. Department of Agriculture last week projected corn plantings would rise 4.3% from last year to 92 million acres.
Plantings of soybeans are expected to stay relatively unchanged from last year, despite high prices and concerns about supplies. Soybean futures on Wednesday climbed 1.4%.
"There's a little more talk that corn is going to get some acres. It's just beating the pants off soybeans in the Midwest, and it's actually making some pretty good inroads down south," Karlin said.
Commodity funds weighed on corn by selling an estimated 16,000 contracts, a large amount, traders said.
Futures felt additional pressure as market participants unwound long corn/short wheat spread trades. Traders had previously been buying corn and selling wheat on outlooks for tight corn supplies.
"Corn had gained a bunch on the wheat, and that was probably a little too far too fast," said Sid Love of Kropf & Love Consulting.
Corn and wheat are linked because both grains are used for livestock feed. CBOT wheat ended little changed Wednesday.
Ethanol futures also were little changed, with the May contract rising 0.3 cent, or 0.1%, to $2.585 per gallon. May oats edged up 1/2 cent, or 0.1%, to $3.90 a bushel.