U.S. corn futures are expected to open lower Wednesday on harvest pressure and questions about demand.
Chicago Board of Trade futures are called 3 cents to 5 cents lower. In overnight trade, corn for September delivery was down 2 3/4 cents to $7.06 1/2 per bushel while December corn, the most active contract, was down 4 1/2 cents to $7.18 1/2.
The market fell more than 3% Tuesday amid questions about demand and scattered reports that yields in some areas were better than expected. The retreat in prices, following a Monday government report that lowered corn demand projections, prompted more selling by traders worried the market would continue to slump, analysts said.
"It's kind of like a snowball that gets rolling down the hill," said Jason Britt, president of Central States Commodities.
Some farmers in parts of Iowa and Illinois have reported corn yields better than they expected, analysts said.
Such reports are "certainly a caution flag for the bulls," MF Global broker Joseph Vaclavik said in a report to clients.
"Many may be inclined to step aside until we know more about the crop," he added.
But Britt said such reports are scattered, and that even in those cases, farmers aren't "knocking it out of the ballpark" with their yields. Yields are still substandard, he said, just not as bad as some had expected. He added that these yield reports are based on early-planted corn, which likely has better yields. Much of this year's corn crop was planted later than normal.
Britt expects prices to open lower Wednesday, but thinks losses will be limited by an emerging frost threat in the far northwest corn belt. Forecasts are calling for a potential freeze in parts of Minnesota and the Dakotas Thursday morning.
Damage from a frost or freeze would have a bigger impact than usual, Britt said, noting that U.S. corn supplies are already projected to remain tight through next year.
But demand uncertainty looms over the market. The U.S. Department of Agriculture's Monday report lowered demand projections for ethanol, exports and feed, reaffirming concerns that buyers are less willing to by corn at prices approaching $8 per bushel.
Meanwhile, the harvest is picking up speed, which is adding more supplies to the pipeline and weighing on prices, traders said.