U.S. corn futures are expected to open higher Tuesday after the government increased its supply projections less than traders had anticipated.
Expectations for Tuesday's trade vary, but many traders are saying prices could open 5 to 10 cents higher on the U.S. Department of Agriculture's monthly supply and demand report.
The USDA projected that old crop ending stocks, or stockpiles by the end of August, would be 868 million bushels, up from a June estimate of 730 million but below analyst expectations of 911 million. Traders were widely expecting an increase because of a June 30 quarterly supply report that appeared to indicate corn usage was slowing.
Meanwhile, the USDA said new crop ending stocks, or stockpiles at the end of August 2012, would be 870 million bushels, up from a June estimate of 695 million but below the average analyst guess of 1.013 million.
The report was seen as mildly supportive, but in general a non-event for grains and oilseeds.
"It's a mixed bag, not as many fireworks as we saw in the June 30 report," said U.S. Commodities analyst Dax Wedemeyer. Wedemeyer and other analysts said the report will likely boost prices early but that traders will then turn their attention to weather forecasts and the economy.
The market received supportive export news Tuesday, as the USDA announced sales of 110,000 metric tons to South Korea for the 2011-12 marketing year and 233,000 metric tons to unknown destinations. Traders have generally assumed recent sales to unknown destinations have been to China.
In the supply and demand report, the USDA hiked projected China corn imports by 1.5 million metric tons, to 2 million. Traders in the past week have speculated that ultimately China's imports could climb to 5 million tons or higher.
Worries about Europe's debt problems weighed on prices overnight and could limit gains Tuesday, analysts said.
But weather forecasts are causing some concern about the crop, and could limit losses. The USDA left its yield projection Tuesday unchanged at 158.7 bushels per acre in Tuesday's report, but Wedemeyer said "I think you could see the crop get a little smaller in the coming weeks due to the dry weather."
The crop in many cases is in its pollination phase, drought conditions during this period can hurt yields.