U.S. corn futures are expected to start higher Wednesday as weakness in the dollar and gains in crude oil support prices.
Traders predict corn for December delivery, the most actively traded contract, will open up 2 cents to 3 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract rose 1 1/4 cents, or 0.2%, to $7.28 3/4 a bushel.
Weakness in the dollar helps lift the grain markets as it makes U.S. commodities more attractive to foreign buyers. Rising crude oil prices are supportive to prices because ethanol is made from corn.
Additional strength comes from ongoing concerns output will fall short of expectations due to poor weather this summer and planting problems in the spring, traders said. Traders worry the U.S. Department of Agriculture, in upcoming crop reports, will lower its estimates for how much corn was planted and will be harvested.
"Overnight prices ended higher, with ongoing concerns about this year's crop production figures an ongoing supportive feature," said Brian Hoops, president of Midwest Market Solutions, a brokerage in South Dakota.
Traders are paying close attention to the USDA's output and acreage estimates because of concerns about strong demand outstripping supply. Corn futures reached record highs on supply concerns in June and have since pulled back about 11%.
Crop concerns increased this week after the USDA's Farm Service Agency issued acreage data that indicated farmers may harvest fewer acres than previously expected. The data showed farmers reported to the agency that poor weather prevented them from planting more acres than expected, analysts said.
Grain users also are worried unfavorable weather--notably a July heat wave--has reduced the yield potential for acres that were planted. Harvest will begin in major Midwestern corn-producing states next month.