U.S. corn futures are poised to open slightly higher Wednesday on support from firm cash prices, while a modest pickup in the planting pace limits the markets.
Chicago Board of Trade futures are expected to open 1 to 2 cents higher. In overnight trade, corn for May delivery was flat at $7.19 per bushel, and July corn gained 1 cent, to 7.24.
The December contract, which reflects supplies from the crop currently being planted, was down 1/2 cent to $6.62. The market has fallen 4.6% this week as planting in the U.S. corn belt has increased, easing fears about a late-planted crop that would yield less. Commodities in general have been under pressure, said Jason Britt, president of Central States Commodities.
The market is holding just above technical support at the 50-day moving average. Britt said a dip below the average would likely trigger a round of fund-selling, which would accelerate the decline.
Still, the market is still near historic highs, and with good reason, Britt said.
"We still have tight supplies, we still have to raise a crop," Britt said.
While farmer planting is increasing across the heart of the corn belt this week with dry weather expected the next couple days, Meteorlogix says the long-range forecast calls for wet conditions through the middle of the month. Supplies are projected to hit their lowest level in at least 15 years before the new harvest rolls in during the fall, and the dwindling stockpile has prompted concern that some ethanol plants won't be able to find corn late in the summer.
MF Global broker Doug Bergman added in a morning note to clients that cash prices have held firm despite the recent dip in futures, as farmers turn their attention to planting rather than selling corn.
In other news, import prices of U.S. corn fell Wednesday at key Chinese ports, taking a cue from a sharp two-day slump in bellwether Chicago corn futures. A downturn in U.S. corn prices may signal China's re-entry into the market.
(Chuin-Wei Yap contributed to this report.)