U.S. corn futures are expected to open sharply higher Thursday after the government reaffirmed that supplies continue to tighten.
Corn futures at the Chicago Board of Trade are expected to open 20 to 30 cents higher. The market will likely be joined by soybeans, which are poised to jump more than 50 cents on the U.S. Department of Agriculture's data, according to analysts.
Although the USDA projected acreage of 92.2 million, up 4 million from a year ago and up 500,000 acres from analyst forecasts, that jump was partly negated by lower-than-expected quarterly supplies.
The USDA said that supplies in storage as of March 1 totaled 6.52 billion bushels, down from the average analyst estimate of 6.70 billion and below last year's tally of 7.694.
The supply estimate confirmed market fears about tight supplies, said Don Roose, president of U.S. Commodities in Des Moines, Iowa.
"Our usage for the first half of the year has been on a stronger-than-normal pace," he said.
With supplies expected to dip to their lowest level in 15 years this year, analysts have been looking for signs that sharply higher prices would eat into demand.
They have also said prices must climb in order to compel farmers to plant more acres. While corn is widely seen as being more profitable than soybeans based on current prices, analysts have said overall acreage will be limited by the amount of available arable land.
Corn for May delivery was down 3 3/4 cents to $6.59 1/2 in overnight trade after slipping 1.3% Wednesday. Roose said that the market's recent dip leaves it poised for a strong rally on the USDA data.
The tightening near-term supplies should favor nearby futures contract months versus deferred contracts, analysts added.
Corn will also have support from a marketing year high in export sales. Total net sales for the week ending March 24 hit 1.92 million metric tons, boosted largely by 1.22 million metric tons to "unknown destinations," which traders widely assume is China.
Roose said the export sales total was supportive but not a huge surprise, as some traders were expecting weekly sales as high as 1.7 million metric tons.