CHICAGO (Dow Jones)--U.S. corn futures are expected to start slightly higher Tuesday as stabilizing external markets encourage a rebound from a one-month low.
Traders predict corn for December delivery, the most actively traded contract, will start up 2 cents to 4 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract rose 1 cent, or 0.1%, to $6.87 a bushel.
Stabilizing prices for crude oil and equities should allow the grains to recover after spillover pressure from sharp losses in the external markets recently dragged down agricultural commodities. Traders said grain prices would continue to suffer if the external markets take another dive.
"Corn traders are going to be closely watching the outside markets, and if they see some changes in those markets, we are probably going to see the corn market move with them," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
Corn prices were under pressure even before the external markets started tumbling on concerns about the world economy. Prices have pulled back 15% since reaching a record high in early June as worries about low inventories have eased.
Forecasts for mostly favorable weather weigh on prices, as the conditions encourage a large harvest. Farmers need to harvest a large crop to prevent a further dip in inventories that are already projected to reach a 15-year low.
Yet, grain users remain nervous about damage to the crop from an intense heat wave in July. The U.S. Department of Agriculture, in a weekly report Monday, reduced its good-to-excellent rating for the crop by two percentage points to 60%.
"The corn crop is in some distress," said Dennis Gartman, publisher of the Gartman Letter, a daily financial newsletter.
Traders expect the USDA will cut its output estimate in a monthly crop report Thursday due to poor weather. The average of analysts' estimates for corn production is 13.083 billion bushels, down from the department's July estimate of 13.47 billion bushels, according to a survey by Dow Jones Newswires.