U.S. corn futures are expected to start near 32-month highs Friday on strong demand, but could run into profit-taking ahead of the weekend, traders said.
Traders and analysts predict corn for May delivery, the most active contract, will open 2 to 3 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract crawled 3 cents, or 0.4%, higher to $7.39 3/4 a bushel.
Supporting futures are concerns about robust demand from foreign buyers and domestic users, including livestock producers and ethanol manufacturers. Futures need to rise to choke off demand, as inventories are projected to drop to a 15-year low by the end of the crop's marketing year on Aug. 31, analysts said.
"The market remains underpinned by recent strong demand. Technically, new highs should be made at some point today [Friday], with profit-taking weighing at times," Wisconsin-based risk management firm Stewart-Peterson told clients in a note.
Nearby corn for March delivery overnight matched a 32-month high before settling up 0.3% at $7.31 3/4. May corn is trading near its contract high of $7.44 1/4.
Futures have climbed recently to curb demand and entice farmers to expand plantings this spring to replenish supplies. Farmers are expected to sow significantly more corn than they did last year, but poor weather could still derail plans for a big harvest.
Traders are already worried about the potential for rain to delay planting, which will begin in early April. A stormy period in the Midwest during the next seven days will delay early spring fieldwork, according to Telvent DTN, a private weather firm.
Strength in crude oil prices should support further gains Friday, as it will encourage production of corn-based ethanol, according to Doane Advisory Services, an agricultural advisory firm in St. Louis. However, "light profit-taking from recent gains could limit old-crop months and are likely to weigh on new-crop futures on the open," the firm said in a market comment.
Corn for December delivery represents the "new crop," or grain that will be planted this spring and harvested next fall. Old-crop contracts, including the most-active May contract, represent corn left over from previous harvests.