U.S. corn futures are expected to start near a three-week high Thursday as users of the grain snap up supplies amid concerns poor weather will reduce the next harvest.
Traders predict corn for July delivery, the most actively traded contract, will start 5 cents to 10 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract rose 9 cents, or 1.2%, to $7.58 3/4 a bushel.
Rains delaying planting continue to support prices as grain users worry farmers will sow fewer acres than previously expected. Grain users are on edge because farmers need to plant and harvest a big crop to replenish inventories, which are projected to reach a 15-year low this year.
"Grains prices continue to power ahead, with weather and its implications for supply taking center stage," Barclays Capital told clients.
Corn futures reached record highs last month as demand stayed strong in the face of high prices and are down just 3% from that level. The market may set fresh highs if the weather remains poor and demand stays strong, analysts said.
Weather conditions look unfavorable for planting in the Midwest through next week. The greatest delays are over eastern areas, including Indiana and Ohio, where farmers are way behind on planting.
"Another prolonged period of wet weather will be developing across the Midwest from west to east during the next few days, bringing more disruptions and delays," said Mike Palmerino, senior agricultural meteorologist for Telvent DTN, a private forecaster.
Corn supplies are under increased pressure because foreign demand has increased since prices dropped to six-week lows last week as part of a broader selloff of commodities. Grain users, worried about the potential for a late harvest this fall, are taking advantage of the lower prices to cover their needs.
The U.S. Department of Agriculture said weekly corn export sales for the week ended May 18 totaled nearly 1.2 million tons, a large amount. Sales for delivery before the next harvest reached 843,200 tons, up 94% from the previous week. Top buyers came from Asia, with South Korea and Japan making significant purchases.