U.S. corn futures are expected to start stronger Wednesday on increasing concerns farmers will reduce plantings due to wet weather.
Traders and analysts predict corn for July delivery, the most actively traded contract, will open up 3 cents to 5 cents a bushel at the Chicago Board of Trade. In overnight electronic trading, the contract rose 5 cents, or 0.7%, to $7.38 1/4 a bushel.
Leading prices higher are rains moving into the Midwest and northern Plains that will keep farmers out of their fields and may encourage them to shift acres to soybeans from corn, analysts said. Farmers also may leave the unplanted land idle and cash in on insurance policies. Corn planting is already behind schedule in the regions due to cool, wet weather.
"The debate continues on whether farmers hold out to plant corn," said Matt McGee, analyst for Country Hedging, a brokerage in Minnesota.
Grain traders are keeping a close eye on weather forecasts as farmers need to plant and harvest a large crop to replenish inventories, which are expected to drop to a 15-year low this year. Corn futures are 6% below a record high reached last month on concerns about strong demand draining supplies.
Rain, thunderstorms and cooler conditions will keep planting progress slow in the Midwest this week, according to Telvent DTN, a private weather firm. A drier, warmer trend early next week will be more favorable, especially through the flooded fields of the eastern and southern Midwest. Yet, "major delays in planting continue in Indiana and Ohio, with some corn acreage likely not getting planting," the firm warned.
In the northern Plains, cool to cold weather Wednesday night may mean frost and light freezing conditions from central North Dakota eastward through northern Minnesota, threatening any emerged crops, according to Telvent DTN. Wet, cool conditions will continue to limit field work potential this week.
Plantings will still rise nationwide from last year, although the increase may be smaller than expected, analysts said.
"Traders are focused on expectations of smaller U.S. corn acreage," said Duane Lowry, market analyst for FarmAssist.com.
Increasing demand could offer additional support to prices following a recent sell-off, traders said. Corn dropped 2.8% Tuesday to a one-week low.
Corn prices in major producing areas of China rose in the week to Wednesday, as inventories remained tight in producing areas and traders were unwilling to part with stocks. Processors and traders were continuing to raise bid prices to obtain more corn amid tight farm inventories.
Exporters inspected 4.6 million bushels of U.S. corn for shipment to China from the Louisiana Gulf in week ended May 19, according to federal data issued Monday. Confirmation of the inspections from the U.S. Department of Agriculture followed recent talk of export sales to China. The government will issue a report on weekly export sales Thursday.