Profit-taking dragged U.S. corn futures down from new 30-month highs Monday.
Corn for March delivery, the most-active contract, slipped 3 3/4 cents, or 0.6%, to $6.74 3/4 a bushel at the Chicago Board of Trade. The contract backpedaled after touching a fresh high of $6.82 1/2 a bushel.
Traders took money off the table as a U.S. Department of Agriculture crop report that's not out until Wednesday added some uncertainty into the market. The report, however, is widely expected to confirm corn supplies are precariously low.
Futures prices have climbed recently in an attempt to slow demand and entice farmers to sow more acres to replenish inventories. Corn supplies are projected to come in at a 15-year low when the marketing year ends Aug. 31.
"I don't think gains will hold going into the report and I don't think breaks will last either," said Tim Hannagan, analyst for PFG Best, a brokerage firm in Chicago.
Corn continues to compete for acres with soybeans, which also are trading above two-year highs, and cotton, which last week hit new post-Reconstruction Era peaks. The crops, which have rallied on supply concerns, are all planted in the spring and will be harvested next autumn.
Poor weather in Argentina, the world's second-largest corn exporter, means even more demand could shift to the U.S., the top exporter of the grain. Private analysts have repeatedly cut their forecasts for Argentina's corn harvest, and many expect the government will follow suit on Wednesday.
"The ongoing talk of the tight U.S. carryout has underpinned the market," Citi grains analyst Terry Reilly said.
The USDA last Thursday reported corn export sales of more than 1.2 million metric tons for the last full week of January, well above analysts' estimates. Included in those figures were net sales of 1.17 million metric tons for the current 2010-11 marketing year, which runs through Aug. 31.
Yet, weekly U.S. corn export inspections look "a little bit worrisome" and indicate exports may not reach the government's target for the year, Reilly said. Weekly inspections need to average 41.3 million tons to reach the target and came in Monday at 26.6 million tons, he said.
In other markets, ethanol futures slipped with corn following recent gains. Ethanol for March delivery settled down 1.5 cents, or 0.6%, at $2.398 per gallon at the CBOT.
U.S. oat futures rose in an attempt to entice farmers to sow the crop this spring, an analyst said. Statistics Canada on Friday estimated oat stocks in Canada, a major exporter, were 2.1 million tons as of Dec. 31, down 31% from a year earlier. Oats for March delivery ended up 5 1/2 cents, or 1.3%, at $4.21 a bushel at the CBOT.