U.S. corn futures are expected to start higher Friday as an unusual purchase by Japan, the world's top buyer of the grain, fuels concerns that output will fall short of expectations.
Traders predict corn for December delivery, the most actively traded contract, will open up 2 cents to 4 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract rose 3 1/4 cents, or 0.5%, to $7.16 1/4 a bushel.
Japan's purchase is expected to drive prices higher as it struck deals to buy 140,000 metric tons of corn for delivery in the 2012-13 marketing year, which doesn't being until September 2012. It's rare for a country to buy grain that far in advance, feeding worries that a smaller-than-expected harvest this autumn could lead to higher prices next year.
Grain users are nervous about the upcoming harvest because a July heat wave damaged the crop. Prices are already historically high due to strong demand for the limited supply.
Japan "must feel like crop problems this year are going to extend into next year, and they're afraid of higher prices," said Brian Hoops, president of Midwest Market Solutions, a commodities brokerage in South Dakota.
Concerns about the upcoming harvest have supported prices recently, helping the corn market resist steep losses seen in equity and other commodity markets. As of the end of Thursday's day session, corn for December delivery was down just 1 1/2 cents for the week.
Corn prices surged earlier this summer, reaching an all-time high in June on concerns about strong demand draining inventories. Prices have since pulled back about 12%.
The market's resilience in the face of recent losses in external markets is a "pretty telling sign that there's a lot of concern about this corn crop," Hoops said.
Traders will receive fresh information about crop conditions next week as an annual agricultural tour begins surveying corn and soybean fields across the Midwest. The tour, headed up by agricultural advisory firm Profarmer, will issue a corn yield estimate next Friday.