U.S. corn futures are expected to open slightly higher Thursday on worries about hot, dry corn belt weather and outside market support.
Traders expect Chicago Board of Trade futures to open steady to 4 cents higher. In overnight trade, September corn was up 3 1/4 cents to $6.90 per bushel. July corn, which expires at 1 p.m. EDT and is very thinly traded, was down 2 3/4 cents to $7.24.
Traders are keeping a close eye on weather forecasts, the looming arrival of a high pressure ridge in the corn belt that could keep temperatures hot and dry through next week. A long, hot dry spell would pose problems for the crop, which in many areas is in a crucial growth stage.
The market has already factored in a high pressure ridge and the resulting heat, said Jim Riley, Linn Group analyst. The question is how long it will be a factor in the corn belt, he said. Weather forecasts have differed on that point.
"Sunday night's forecast will probably bear a lot of weight," Riley said.
Supplies are already tight, and analysts say a strong crop is needed this year to begin replenishing supplies, or at least keep up with robust demand.
Weekly export sales from the U.S. Department of Agriculture Thursday were strong, but unsurprising. The USDA reported net sales of 1.68 million metric tons, including 1.20 million for the 2011-12 marketing year. The sales included previously announced sales of 540,000 metric tons to China.
"It's old news in some ways, but it's confirming some of the things that have been floating out there," said Jerry Gidel, analyst with North America Risk Management Services.
Analysts had estimated total sales would come in anywhere from 1.2 million to 2.7 million.
Supportive outside markets, including a weaker dollar, will help underpin prices Thursday, analysts said. But Riley said that fund-buying in corn could be relatively subdued, as fund managers are reluctant to take big positions during the summer, when prices can be volatile because of the weather.
"When the rain comes, we all know that prices are going to be down, and down significantly," he said.
He added that prices have already jumped 70 cents from lows Monday night, which could limit further upside in the near-term.