U.S. corn futures are expected to open higher Wednesday in a rebound from losses earlier this week as traders position themselves ahead of a government report Thursday.
Analysts expect Chicago Board of Trade futures to open 3 to 5 cents higher. In overnight trade, corn for March delivery was up 3 1/2 cents, or 0.5%, to $7.02 per bushel. May corn, the most active contract, was up 4 1/2 cents to $7.10.
After dropping 4.2% the first to days of the week, the market is poised for a modest rebound, analysts said, as traders expect the government to reduce slightly its supply projection for this year. The U.S. Department of Agriculture releases its monthly supply and demand report before the market opens Thursday.
"The market is expected to be choppy today as traders even positions ahead of the Supply/Demand report," Doane Advisory Services said in a morning outlook.
Analysts say the USDA could increase projected demand for ethanol or exports. On average, analysts expect the USDA to project 2010-11 ending stocks, which represent the corn in storage at the end of the marketing year in August, at 667 million bushels, down from a February projection of 675 million.
Traders are already looking beyond Thursday's report, however, to end-of-month reports on planted acreage and a quarterly stocks report.
"The market will need to wait until the March stocks report to gain a more accurate view of corn demand," Macquarie Bank said in a note to clients.
Corn prices have soared recently to their highest level since the record-breaking rally of 2008, and many analysts think the market will ultimately set new records due to extremely tight supplies and the need to compel farmers to plant more acres this year.
Chilly, wet weather has prompted some concern about a slow start to the planting season, although analysts note that it's too early to rally the market on that worry.
The market's recent weakness has been due to uncertainty about the global economy, and whether soaring crude oil prices will hurt demand for commodities. Technical selling has also been a factor.
Brokerage FC Stone said in a morning outlook that some traders are suggesting a "major price top" in the market, as some private forecasters predict that with a trend-line yield in 2011, ending stocks could be back above 1 million bushels in 2012.