U.S. corn futures on Wednesday are expected to rebound from a nearly 10-week low as traders continue to monitor the nuclear crisis in Japan, the top importer of the grain.
Traders and analysts predict corn for May delivery, the most actively traded contract, will start 7 to 9 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract jumped 7 cents, or 1.1%, to $6.43 a bushel.
Futures are set to bounce after sliding the daily, 30-cent limit Tuesday as investors pulled cash out of risky assets due to concerns about Japan. A recovery Wednesday in Japan's Nikkei stock market, which had been under heavy pressure, should help open the door for gains in agricultural commodities, traders said.
"The situation in Japan looks a little more stable," said Joe Barker, analyst for Country Hedging, a commodities brokerage.
Grain traders have been paying close attention to the situation in Japan because it added to concerns about the future of the global economy, which was already seen as shaky due to unrest in the Middle East. Traders also are worried Japan may temporarily reduce its grain purchases due to infrastructure damage from last week's earthquake and tsunami.
Corn futures have pulled back 12% since reaching a 32-month high March 4 on strong demand and concerns farmers won't plant enough this spring to replenish tight supplies. The market fell 8.6% last week as concerns grew that Middle East tensions and high energy prices would dent global demand.
Yet, users of corn, such as livestock producers, remain nervous about supplies. They are projected to reach a 15-year low at the end of the crop's marketing year on Aug. 31.
U.S. grain shipments to Japan are continuing despite the earthquake and tsunami last week, according to the U.S. Grains Council. The industry group said it had "not heard of any cancellations in shipments" and that Japan has a "nimble, well-prepared agriculture economy."
Demand also perked up from elsewhere in Asia following the recent break in prices. South Korea's Korea Feed Association snapped up two cargoes of corn totaling 110,000 metric tons.
Farmers are expected to expand plantings significantly this summer to take advantage of high corn prices and meet strong demand. Yet, the ultimate size of the harvest is a question mark because of uncertainties about the weather.
A heavy snowpack and potential flooding in the upper Midwest is increasing the likelihood of a late planting season, which could reduce corn yields and discourage farmers from sowing the crop, according to Mosaic Co.'s (MOS) chief executive. The fertilizer producer, which is projecting very strong spring demand for its phosphate and potash, is keeping an eye on weather in the northern Midwest and Canada, as the winter's "tremendous snowfalls" melt, Chief Executive Jim Prokopanko said in an interview.