U.S. corn futures are expected to start mixed Tuesday after approaching a 32-month high overnight, with traders waiting to see whether new buyers enter the market as the new month begins.
In overnight electronic trading, corn for March delivery, the nearby contract, topped $7.25 a bushel before closing unchanged at $7.22 1/2 at the Chicago Board of Trade. Corn for May delivery, the most-active contract, edged up 1/4 cent, or 0.03%, to $7.31 1/4.
Corn futures could extend gains after leading the grain markets higher Monday, traders said. Prices have rallied recently in an attempt to curb strong demand and entice farmers to expand plantings to replenish supplies, which are projected to come in at a 15-year low at the end of the crop's marketing year on Aug. 31.
Farmers are expected to increase corn plantings significantly this spring due to high prices. Yet, poor weather could derail attempts to harvest a large crop next fall.
"A new month could bring more money into the complex if funds try to step up coverage ahead of the growing season," said Bryce Knorr, analyst for Farm Futures, an agricultural publication.
Futures ended higher Monday, rebounding from early losses on strong demand. After slumping through most of last week, it has become clear that buyers are emerging on breaks in prices, analysts said.
Traders are eagerly anticipating the U.S. Department of Agriculture's prospective plantings report, due out March 31, as it will provide an updated forecast for how much corn farmers will sow. The government last week projected producers will increase plantings 4.3% from last year to 92 million acres, but some traders doubt whether growers can find enough extra acres.
"Trader sentiment remains bullish and unwilling to consider an approach from the short side," said Duane Lowry, analyst for FarmAssist.com.
Traders have been nervous about the potential for China to increase purchases of U.S. corn because strong demand from the resource-hungry nation could make supplies even tighter. An executive for Cofco Ltd., China's state grain trader, said Tuesday the company was holding back from buying U.S. corn due to high prices.
China has been buying low-quality wheat recently, instead of corn, due to large supplies of feed-grade wheat, analysts said. Still, some shrugged off Cofco's statement as an attempt to pressure corn prices by indicating weaker demand.