U.S. corn futures are expected to start higher Wednesday as grain users step up purchases after prices dropped to six-week lows.
Traders predict corn for December delivery, the most actively traded contract, will open up 2 cents to 3 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract rose 2 3/4 cents, or 0.4%, to $6.93 a bushel.
Pushing prices higher is buying by users of corn who see the recent setback in prices as an opportunity to secure supplies of the grain. East Asian importers are actively buying feed grains after a slump in global prices, with South Korea's Major Feedmill Group snapping up 110,000 metric tons of optional-origin corn, according to trading executives.
"The value-based buyers are now starting to be interested," said Rich Nelson, director of research for Allendale, a brokerage firm in Illinois.
Corn futures have pulled back 14% since the nearby contract reached an all-time high near $8 a bushel in June. Profit-taking and reports of better-than-expected harvest results have weighed on the market after prices surged earlier this year on concerns about poor weather reducing output.
Strong demand from foreign buyers could help perk up prices. Traders earlier this week were buzzing about potential sales to China, although there has been no confirmation of any deals.
China has the potential to be a major buyer. Its corn imports in August reached the highest monthly volume in 10 months, rising 42% from the previous month to 244,502 metric tons, according to the General Administration of Customs. China's demand for corn imports is expected to accelerate as global prices come off recent highs, fueled by the country's sharply rising feed demand. Still, China could buy South American corn, instead of grain from the U.S.
"China's [corn] supply is tight, and the country may be starting an import cycle that could take annual import volumes as high as 9 million or even 10 million tons," Shanghai JC Intelligence Co. analyst Xiao Jun said.
In other news, traders are waiting learn whether the Federal Reserve has decided to take more measures to buoy the sluggish economy. The spotlight will remain on the Federal Open Market Committee, with a policy statement expected around 2:15 p.m. EDT.
--Chuin-Wei Yap in Beijing contributed to this article.