U.S. corn futures on Monday are expected to rebound from nearly three-month lows as the slide in prices has attracted grain users to the market.
Traders predict corn for December delivery, the most actively traded contract, will start up 3 cents to 5 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract rose 4 3/4 cents, or 0.7%, to $6.43 1/4 a bushel.
Driving prices higher was buying by grain users who saw the recent break in prices as an opportunity to purchase corn they need to produce ethanol or feed to livestock. There was "fresh talk that China is close to securing U.S. corn" after prices dropped nearly 8% last week, wrote analysts for AgResource Company, an agricultural consultancy in Chicago. Traders pay close attention to chatter about China entering the market because it has the potential to buy major quantities of corn and its import needs are unknown.
Other users of corn also have increased purchases due to the decline in prices traders said. AgResource advised its clients who feed livestock and produce ethanol to "be prepared to take additional forward corn and soymeal coverage" if prices pull back any more. Corn and soymeal can be used for animal feed.
The market will attempt to rebound after falling sharply last week on broad-based selling of commodities and equities linked to concerns about a global economic slowdown. In overnight trading, "prices bounced off their lows as buying interest emerged," said Ami Heesch, analyst for Country Hedging, a commodities brokerage in Minnesota. Still, traders said corn prices could come under fresh pressure if external markets tumble again.
After the close of trading Monday, traders will take a look at the U.S. Department of Agriculture's weekly crop-progress report to see how much of the U.S. corn harvest is complete. Analysts estimated harvest should be about 19% to 22% finished, up from 10% a week ago. The report is due at 4 p.m. EDT.