CBOT corn outlook: Lower on profit-taking, acreage outlooks

U.S. corn futures are expected to start lower Wednesday as the market extends a setback from 31-month highs on profit-taking and projections for a massive increase in plantings.

Traders predict corn for March delivery, the nearby contract, will open down 2 cents to 4 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract slipped 2 3/4 cents, or 0.4%, to $6.87 3/4.

Traders are taking money off the table after futures prices soared above $7.10 a bushel Monday on concerns about precariously tight corn supplies, which are projected to come in at a 15-year low by the end of the crop's marketing year Aug. 31. The market needed "washout of excessive market length, which normally produces the seasonal 'February lows' before a new rally effort into the Northern Hemisphere planting season," Chicago-based agricultural consultancy AgResource Company said in a note.

AgResource sees the setback as temporary because futures prices need to rise to slow demand for limited supplies. The market also needs to encourage a dramatic expansion in plantings to keep stocks steady and must "keep sending that message well into April," when sowing begins, the firm said.

Yet, forecasts for large plantings have already helped pull down prices 3.2% from Monday's high. The U.S. Department of Agriculture, in "baseline" acreage forecasts issued Monday, projected corn plantings at 92 million acres, up 4.3% from last year and above traders' expectations. Farm equipment maker Deere & Co (DE) also sees corn plantings increasing to 92 million.

Forecasts from other market participants have been closer to 90 million or 91 million acres. Ohio-based agribusiness group Andersons Inc. (ANDE) last week estimated spring plantings around 90 million acres.

"Profit-taking in new-crop [deferred corn futures contracts] has been triggered by USDA's baseline acreage forecast of 92 million acres, which was above trade expectations for 2011," Doane Advisory Services, a St. Louis-based agricultural advisory firm, told clients Wednesday.

In other news, the government-backed China National Grain and Oil Information Center maintained its output and acreage estimates for last year's grain harvest Wednesday. Corn output in 2010 was 172.5 million tons, up 5% on year, according the center. Some traders had questioned whether production was smaller than previously reported, which could increase the potential for China to import U.S. corn.

(Source: http://www.dairyherd.com/dairy-news/latest/CBOT-corn-outlook-Lower-on-profit-taking-acreage-outlooks.html)