U.S. corn futures are expected to start higher Monday on increasing concerns that cool, wet weather delaying planting will reduce the size of next fall's harvest.
Traders predict corn for July delivery, the most actively traded contract, will start 6 cents to 10 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract jumped 11 cents, or 1.6%, to $6.93 a bushel.
Forecasts for rain and cool temperatures in the Midwest are supporting prices as the conditions will slow planting of the crop, raising concerns farmers will sow fewer acres. The potential for lower-than-expected plantings worries grain users as farmers need to grow a large crop to replenish inventories, which are expected to reach a 15-year low this year.
"Episodes of cool, wet weather will continue to disrupt and delay corn and soybean planting in the Midwest," warned Mike Palmerino, senior agricultural meteorologist for Telvent DTN, a private weather firm.
Traders are on edge about inventories after corn futures reached record highs last month as demand stayed strong in the face of high prices. Prices have since pulled back 12% but could re-challenge the previous highs if weather stays unfavorable, analysts said.
The U.S. Department of Agriculture will issue an update on planting in a weekly crop progress report at 4 p.m. EDT. Planting should be about 60% complete, traders said. A week ago, planting was 40% complete, behind the average of 59% for that time of year.
The delay is worrisome as farmers often say corn's yield potential declines if the crop is planted after May 15. That means the crop may produce less grain even if farmers eventually get it in the ground.
"Ongoing weather concerns pose a significant supply risk to the grains markets, especially for corn, where U.S. inventories remain very low," Barclays Capital told clients in a note.
Increasing demand for corn from foreign buyers adds to concerns about dwindling supplies. Private exporters struck deals to sell 125,000 metric tons of U.S. corn to South Korea for delivery before Aug. 31, the USDA said Monday. South Korea bought corn aggressively last week after prices dropped to six-week lows.
There continues to be unconfirmed chatter in the market about sales to China. The USDA on Friday announced exporters sold 271,200 tons of corn but said it was to destinations unknown.