U.S. corn futures are expected to open higher Thursday on continued buying by China and concerns over weather come mid-July.
Traders predicted corn for December delivery, the most actively traded contract, will start 4 cents to 8 cents higher at the Chicago Board of Trade. In overnight electronic trading, the contract rose 5 cents, or 0.8%, to $6.13 1/2 a bushel.
Corn futures have pulled back sharply from all-time highs in early June, fueled in part by federal forecasters pegging corn inventories and the number of acres planted with the crop at higher-than-expected levels. Yet the break in prices has caused an uptick in export buying led by China.
The U.S. Department of Agriculture reported two deals on Thursday for export sales of the upcoming crop. The agency said 540,000 metric tons were sold to China and 300,000 metric tons were sold to an "unknown destination." Traders and analysts speculated the unknown destination was also China.
"We're seeing a lot of sales of corn all of sudden, and I expect that will probably will continue," said Tim Hannagan, analyst for PFG Best, a brokerage in Chicago.
The announcements followed additional deals late last week that were believed to be to China and export sales earlier this week to South Korea and Egypt.
Weather remains a concern as well, providing further support for futures. Near-term forecasts remain favorable to crop development, and the USDA on Tuesday raised its conditions rating for the U.S. corn crop. Still, analysts said heat could develop in mid-July at a key time for the development of the corn crop.
"We can worry about warm temps at pollination when we get there but for now (the) trade must assume 2011 U.S. corn yield potential edging higher," wrote Rich Feltes, vice president of research for RJ O'Brien in Chicago.