U.S. grain futures tumbled Monday as traders looking for more evidence of corn sales to China came up empty.
Corn for May delivery, the most-actively traded contract, closed down 18 1/2 cents, or 2.7%, at $6.71 a bushel at the Chicago Board of Trade. Wheat and soybean futures also weakened.
Traders were disappointed the U.S. Department of Agriculture did not announce fresh export business after reporting a large sale of 1.25 million tons of corn to unknown destinations Friday. Many assumed China was the buyer and had expected the resource-hungry nation to book more grain.
Chatter about sales to China captivated the corn market last week and drove prices upward. The market fell Monday after closing lower Friday on profit-taking and a "buy the rumor, sell the fact" scenario. Futures are still up 8.8% since talk about deals with China emerged.
"You can talk about rumors and rumors of China buying corn every day. When you don't get things showing up, it makes it tough to hold on to those gains," said Chad Henderson, analyst at Prime Ag Consulting, a brokerage firm in Wisconsin.
Increased demand from China would support the corn market because supplies of corn are already projected to reach a 15-year low this year. Corn futures reached a 32-month high earlier this month on strong demand and concerns farmers will not sow enough acres this spring to replenish supplies.
The USDA will issue estimates on spring plantings in a highly anticipated crop report Thursday. Despite the steep sell-off, trading was lethargic Monday as traders waited for the government to issue the report.
The USDA Thursday also will issue a quarterly stocks report that reveals how much grain was in storage as of March 1. Traders said corn stocks may exceed expectations because last fall's crop was of high quality. That raises the possibility livestock and ethanol producers needed to use less corn because they were able to get more mileage out of each kernel.
"There are fears there's going to be a bearish surprise in this report and it's going to come from a higher stocks figure," Henderson said.
Soybean and wheat futures saw more modest declines. Losses in soybeans were limited by ongoing fears 2011 acreage will fall short of levels needed to rebuild supplies because farmers will plant more acres with corn and cotton.
Analysts surveyed by Dow Jones Newswires ahead of USDA's reports predicted corn plantings at nearly 91.7 million acres, up 3.9% from last year but slightly below USDA's most recent forecast. They pegged soybean plantings at nearly 77 million acres, down 0.6% from last year and below USDA's latest estimate.