U.S. corn futures are expected to start higher Tuesday on concerns rains will continue to delay planting in key areas of the eastern Midwest and northern Plains.
Traders and analysts predict corn for July delivery, the most actively traded contract, will start 4 to 6 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract rose 0.9% to $7.04 a bushel.
Pushing prices higher are forecasts for cool weather conditions that will slow planting. Federal crop data issued Monday confirmed farmers are behind in putting the crop in the ground in states like Indiana, Ohio and North Dakota.
The U.S. Department of Agriculture said 63% of the total corn crop was planted as of Sunday, below the five-year average of 75% for that time of year. Planting was just 7% complete in Ohio, behind the average of 70%, and 29% complete in Indiana, behind the average of 66%.
"There is still a lot of corn to be planted and the weather forecasters are calling for a cool week, followed by another round of precipitation going into the weekend," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
Traders are on edge about planting delays because farmers need to harvest a big crop next fall to rebuild inventories, which are projected to reach a 15-year low. Concerns about tight supplies drove corn futures to record highs last month, and prices have since pulled back 10%.
Planting delays fuel concerns about a smaller-than-expected harvest because farmers may not plant all the corn they intended if they can't get it in the ground in a timely manner. The crop often produces lower yields if it is planted past the middle of May.
"The old rule of thumb is that you lose 1 bushel per acre per day of yield on corn planted after the 15th of May, and we are going to be planting 37% of the crop after that date," Pfitzenmaier said.
Traders are keeping a close eye on demand as well, as export business has perked up following a drop to six-week lows last week. Traders continue to digest chatter that China may have booked a significant amount of corn, although that has not been confirmed.
Argentina is close to hammering out a deal that would open up its corn exports to China, according to the head of the Maizar corn growers' association, an Argentine farm group. Yet, it may take six months to a year to complete the deal, as the bulk of Argentina's corn comes from transgenic crops not yet cleared for sale in China, Argentine officials said.
U.S. traders see the deal as supportive to prices because it emphasizes China's longer-term need for corn, according to Farm Futures, an agricultural publication.