CHICAGO (Dow Jones)--Good crop weather and pressure from outside markets are expected to push U.S. corn futures lower in early trade Tuesday.

Chicago Board of Trade corn futures are called 3 to 5 cents lower. In overnight trade, July corn was down 5 cents to $3.54 per bushel and December corn was down 5 1/2 cents to $3.63 1/2.

A stronger dollar, weaker crude oil and declining equities, driven by ongoing concerns about Europe's economy, will set a bearish tone for commodities generally, analysts said. Fundamental news for corn is also bearish, traders said, benign weather allows for the strong start to the U.S. growing season to continue.

Traders are expecting another improvement in the portion of the crop rated good to excellent in Tuesday's weekly crop progress report. The U.S. Department of Agriculture will release the report at 4 p.m. EDT. Traders are expecting the good-to-excellent rating to improve to around 73%-75%.

The market is near the lower end of a two-month-old trading range after the market stumbled Friday on technical selling. A trader and an analyst said that the market would likely have underlying support, although it could be breached if the outside markets are bearish enough.

At current lower prices, "the producer will quit selling again, and the consumer will probably get a little more interested," a trader said.

Managed money accounts cut their short positions in CBOT corn by more than 10% in the week ended May 25, the Commodity Futures Trading Commission said Friday. The CFTC's disaggregated commitments of traders report showed that the managed money category cut 15,111 from its short positions, leaving 125,851 contracts, and cut 7,354 from its long positions, leaving 207,752.

Meanwhile the supplemental commitments of traders report showed that traditional speculative funds cut 15,066 contracts from their short positions and 6,755 from their long positions, leaving them net long 36,763 contracts.

Rabobank said in a report that the reduction in short positions was driven by "strong weekly export sales in April/May and the prospect of a substantial Chinese import programme."

A trader said the net length for speculative funds was negative for the market, as it shows funds still have to shed some long positions.

The next downside price objective for the bears is to push and close prices below solid technical support at the April low of $3.51 1/2, technical analyst Jim Wyckoff said. The bulls' next upside price objective is to push and close prices above solid technical resistance at last week's high of $3.73 3/4 a bushel.

First resistance for July corn is seen at $3.65 and then at $3.68. First support is seen at Friday's low of $3.58 1/4 and then at $3.55.

-By Ian Berry, Dow Jones Newswires; 312-341-5778;