U.S. corn futures are expected to start higher Friday as the market recovers from a steep slide Thursday.
Traders predict corn for December delivery, the most actively traded contract, will start up 6 cents to 8 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract rose 5 cents, or 0.7%, to $7.43 1/2 a bushel.
Driving prices higher is buying by grain users who see Thursday's slide in prices as a buying opportunity. Prices tumbled 3.8% Thursday on profit-taking after reaching contract highs earlier this week.
"Corn rebounded nicely overnight on bargain hunting," said Tregg Cronin, analyst for Country Hedging.
Grain users are stepping up to buy grain because they are nervous the upcoming harvest may fall short of expectations due to intense heat and dryness this summer. The full extent of the damage won't be known until harvest picks up speed in a few weeks.
Brokerage firm INTL FCStone increased concerns about the harvest by making a deeper-than-expected cut to its output forecast after the close of trading Thursday. The firm slashed its harvest estimate 5% from last month to 12.35 million bushels and pegged the average yield at 146.3 bushels an acre, down 4.5% from August. The U.S. Department of Agriculture, by comparison, last estimated output at 12.914 million bushels, with an average yield of 153 bushels an acre.
A yield as low as FCStone's implies corn prices need to climb to curb, or ration, demand for the smaller-than-expected harvest, said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa. Concerns about supplies drove most-active December corn to contract highs earlier this week, and prices have since pulled back nearly 5%.
"There is a good chance that the highs posted this week will be challenged and probably be taken out," Pfitzenmaier said.
Yet, concerns about an economic slowdown could keep a lid on gains after a flat U.S. payrolls reading. Steep losses in crude oil also should put pressure on grain prices, traders said.