CHICAGO (Dow Jones)--U.S. corn futures are expected to start lower Friday as traders take profits following a surge to record highs.
Traders and analysts predict corn for July delivery, the most actively traded contract, will open down 5 cents to 7 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract fell 4 3/4 cents to $7.80 3/4 a bushel.
Prices are pulling back from the new, all-time high reached Thursday on unexpectedly deep cuts in government outlooks for the U.S. harvest and inventories. The market is due for a correction as it also made strong advances earlier in the week, analysts said.
"A dearth of fresh news is causing some of the bulls to take windfall profits following three days of gains, which pushed corn values some 50 cents higher," wrote analysts at AgResource Co., an agricultural consultancy in Chicago.
Yet market participants remain jittery about strong demand draining inventories. The U.S. Department of Agriculture projected Thursday that end-of-season supplies will fall in the next marketing year, which begins in September, even if farmers harvest the largest crop in history.
Grain users are nervous poor weather this summer will hurt output and lead to even tighter-than-expected inventories. Farmers have already struggled with excessive rains and flooding that delayed planting this spring and submerged acres near rivers.
The USDA on Thursday reduced its estimate for how many acres of corn will be harvested this autumn due to flooding from the Missouri, Mississippi and Ohio rivers.
"We caution clients not to turn bearish. The Missouri River flooding will worsen next week," AgResource told its customers.
Indeed, prospects for crops in the Mississippi Delta "continue to decline, especially corn," said meteorologists at Telvent DTN, a private weather firm. Problems extend to the northern Plains, where "showers, thunderstorms and rain will continue to delay the final planting effort," they said.
Concerns about the unfavorable weather could push corn prices higher after the market opens lower, traders noted. Grain users may want to buy the grain when prices decline as some expect the USDA's next crop report June 30 will reveal more lost acres.