U.S. corn futures are expected to start higher Thursday as government export data confirms demand remains strong.
Traders predict corn for May delivery, the most-active contract, will start 2 cents to 4 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract rose 3 1/2 cents, or 0.5%, to $7.25 a bushel.
Futures should feel a boost as weekly export sales topped 1 million metric tons for the fifth consecutive week, a sign that high prices are not choking off demand for corn, analysts said. Top buyers in the week ended Feb. 24 included Japan, which secured nearly 500,000 tons of corn, and Mexico, which bought more than 350,000 tons as part of a push to increase imports after a severe freeze devastated its corn crop in early February.
Concerns about a strike among Argentine port workers could add support to prices, as Argentina is the world's second largest corn exporter after the U.S. Futures reached 32-month highs Wednesday in an attempt to curb demand and entice farmers to sow more acres to replenish supplies, which are projected at a 15-year low.
"It suggests these million-metric-ton weeks in corn are not going to slow down if that strike digs in," said Mike Zuzolo, president of Global Commodity Analytics & Consulting.
Signs of a potential resolution to Argentina's strike were emerging, as the administrative secretary for the port workers' cooperative said negotiators were "not too far apart" in reaching a deal over pay. So far, the effect of the strike has been limited, as only two of the dozen ports lining the banks of the Parana River at Argentina's key grain export hub have been shut down, she said.
Yet, corn futures could continue to feel support from supply concerns ahead of planting in the U.S. Traders expect farmers to expand plantings significantly due to high prices, but poor weather could still derail plans for a big harvest.
"Dips [in prices] would be bought because of the supply side and because of the weather," Zuzolo said.
Paul Pastelok, leader of the AccuWeather.com Long-Range Forecasting Team, warned Thursday that this spring's severe weather season will be more active than normal, meaning there could be a higher-than-average number of severe thunderstorms in the eastern part of the country. The zone of greatest concern lies from Arkansas and Missouri into Tennessee and Kentucky and could shift into the key corn-growing states of Ohio, Indiana and Illinois, he said.