U.S. corn futures rebounded Wednesday as traders refocused on supply concerns after prices dropped by the maximum allowable amount Tuesday.
Corn for May delivery, the most-active contract, jumped 12 cents, or 1.7%, to $7.02 1/4 a bushel at the Chicago Board of Trade. The gains were a turnaround from a 30-cent slide Tuesday that was fueled by profit-taking and unrest in North Africa that sparked concerns about the global economy.
The drop was seen as overdone because corn supplies are projected to come in at a 15-year low by the end of the marketing year on Aug. 31. It provided an opportunity for users of the grain to step in the market and buy, traders said.
"We're still dealing with a very tight situation," said Jason Britt, president of Central States Commodities, a brokerage firm in Missouri.
Indeed, corn futures pulled back Tuesday after initially climbing to a 31-month high of $7.24 1/4 on supply fears. Analysts said they expected the market to reach fresh highs in the coming weeks.
Prices need to rise to slow demand and entice farmers to expand plantings this spring to replenish supplies, analysts said. Large plantings still may not ease concerns because poor weather could hurt the harvest, which won't happen until fall.
"This is the most important growing season approaching that we've seen in recent history," Britt said.
The U.S. Department of Agriculture will issue updated forecasts for crop plantings and supplies at its annual Outlook Forum conference later this week. Projections for larger-than-expected corn plantings, released last week as part of the government's "baseline" report, helped knock down prices.