U.S. corn futures are expected to start stronger Wednesday as poor weather and weakness in the dollar support prices.
Traders and analysts predict corn for July delivery, the most-actively traded contract, will open 10 to 14 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract advanced 14 cents, or 1.8%, to $7.71 a bushel. Corn for December delivery, which represents the crop that will be planted this spring for harvest next fall, rose 4 3/4 cents, or 0.7%, to $6.80 3/4 a bushel.
Corn strengthened overnight with wheat and soybeans and with "outside" markets like crude oil and precious metals. Weakness in the U.S. dollar helped support the gains as it makes commodities cheaper for buyers with other currencies, analysts said.
"Commodity prices are higher as the dollar falls, and no one anywhere should be surprised by that correlation," said Dennis Gartman, publisher of the Gartman Letter, a closely read financial newsletter.
Traders are keeping an eye on weather forecasts, as cool, wet conditions are expected to disrupt corn planting in the coming days. The weather is particularly important this year because farmers need to sow and harvest a large crop to rebuild inventories that are projected to reach a 15-year low.
Worries about the weather are keeping traders on edge and supporting deferred futures contracts after the front-month contract recently stormed to a record high. Nearby futures have more than doubled since last summer on strong demand from foreign buyers, record U.S. ethanol output and steady buying by domestic livestock producers.
"The corn crop shall be planted a bit later than would be optimal, and planting may be even more delayed unless these conditions change quickly," Gartman said.
Conditions look wet through the weekend, at least, as there will be daily rainfall chances for all or parts of the Midwestern Corn Belt from Thursday through Sunday, according to Freese-Notis Weather, a private forecaster. Heavy rains are likely in large parts of Missouri, Illinois, Indiana, and Ohio, the firm said, adding that rainfall amounts look "big" in the six-to-10-day time frame. It also will remain "very chilly" for the next two weeks, Freese-Notis said.