U.S. corn futures are expected to start stronger Tuesday as easing concerns about Greece's debt crisis lift commodity prices.
Traders predict corn for December delivery, the most actively traded contract, will open up 13 cents to 15 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract jumped 15 1/4 cents, or 2.3%, to $6.75 3/4 a bushel.
Driving prices higher are projections Greek Prime Minister George Papandreou will receive a vote of confidence from parliament as he tries to push through new austerity measures. The optimistic outlook is supportive for grain prices as concerns about the potential for Greece to default weighed on the markets recently.
Nearby corn futures have pulled back 11% from a record high near $8 a bushel reached June 10. Broad-based selling fueled by concerns about Greece is responsible for about 60% of the setback, said Rich Nelson, vice president of research at Allendale, a commodities brokerage in Illinois.
"We're attributing [gains] to ideas that this Greece showdown vote will get passed," he said.
Traders are nervous about Europe's debt crisis because a slowdown in the global economy could reduce demand for commodities, including grains. Strong foreign and domestic demand for corn has reduced inventories and caused prices to more than double since last summer.
Demand for corn has perked up following last week's sell-off, as buyers are taking advantage of lower prices to make purchases. Japan, the world's top buyer of corn, bought 300,000 metric tons of feed-grade corn for shipment from July to September, while the Korea Corn Processing Industry Association also snapping up 55,000 metric tons. The sales should help support the advances in corn, Nelson said.
In other news, traders are keeping an eye on weather forecasts amid concerns that hot, dry summer weather could reduce output after excessive rains delayed planting this spring. Farmers need favorable weather to produce a large crop to replenish inventories that have been drained by demand. The U.S. Department of Agriculture, in a weekly report issued Monday, said 70% of the corn crop was in good-to-excellent condition, up one percentage point from the previous week but down from 75% a year earlier.