U.S. corn futures are expected to start stronger Thursday on fresh export demand, including confirmation of a sale to China, and continued weather threats.
Traders and analysts predict corn for July delivery, the most actively traded contract, will start 5 cents to 10 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract rose 5 1/2 cents, or 0.7%, to $7.47 3/4 a bushel.
Prices are expected to rise after the U.S. Department of Agriculture, in a weekly export sales report, said exporters sold 116,800 metric tons of corn to China for delivery before Aug. 31. The government switched the destination for the grain to China from "unknown destinations," confirming chatter that China had stepped into the market after prices recently dropped to six-week lows.
Overall, weekly corn export sales of 779,600 tons for the week ended May 19 were within traders' expectations. The USDA said separately Thursday exporters had sold 168,000 tons of corn to Mexico for delivery after Sept. 1.
"Trader excitement exists this morning," said Duane Lowry, an analyst for FarmAssist.com.
Traders are concerned about strong demand as inventories are projected to drop to a 15-year low before the next harvest this fall. Prices have pulled back 4.6% since reaching record highs last month as demand stayed robust in the face of high prices.
Traders are nervous that farmers may not produce enough grain to replenish inventories because wet weather has delayed planting this spring. Some growers likely didn't plant as many acres as they intended because of the poor weather.
"The market is pretty well focused on weather and planting considerations," said Shawn McCambridge, senior grains analyst for Prudential Bache, a brokerage in Chicago.
Another round of rain and storms during the past day will continue to delay spring planting through eastern and southern areas of the Midwest, according to Telvent DTN, a private weather firm. Longer range maps indicate warmer, drier conditions during the six-to-10-day period will help to dry out fields and improve conditions for planting and early development, the firm said.
In the northern Plains, frost and light freezing conditions from eastern North Dakota eastward through northern Minnesota may damage corn that was planted and has started to emerge from the ground, according to Telvent DTN. There is some chance for warmer temperatures during the six-to-10-day period, but there is also a chance for more rain in the area, the firm said.