December corn was trading a penny lower near 7:00 am CST and Dalian corn was up 0.22% overnight. Chinese stocks were mixed overnight while European stocks had a weaker tone after the S&P downgrade of Spain. US equity markets are higher in early trade after favorable corporate earnings in Europe. The Euro is trading slightly weaker against the US Dollar but most US commodities are trading positive this morning with crude oil and metals moving higher. Grain markets were mixed throughout the night with corn and wheat steady to lower ahead of this morning's report but soybeans moved sharply higher despite yesterday's weak action.

For the report today, the main focus of the trade will be the US corn yield and production estimate. The market is expecting a US average corn yield near 123 bushels per acre vs. the September estimate of 122.80. Production is expected to fall near 10.600 billion bushels vs. 10.727 in September. Some in the trade continue to believe final production is less than 10 billion bushels when assuming harvested acreage as low as 83 million acres vs. current estimates of 87.4. Furthermore, the range of the estimated production level of the US corn crop by various market participants is over 1 billion bushels which reflects the variability in yields across the US Corn Belt and uncertainty in regards to the ultimate size. The market is also assuming beginning stocks of 988 million bushels which was revised lower from 1.181 billion bushels on the September 1st Quarterly stocks report. The stocks report suggested that US corn domestic feed usage may need to be adjusted higher by 100 million bushels or more.

In addition, the market is looking for a cut to the US corn carryout for 2012/13 near 650 million bushels vs. 733 million in September. Global corn ending stocks could come in near 121 million tonnes vs. 123.95 million tonnes. Corn premiums held steady in the Gulf of Mexico yesterday but export demand remains weak while South American corn trades a discount to the US. Argentina port workers ended their 2 day strike which may free up logistical bottlenecks in the port. Corn basis in the interior of the US was steady yesterday with Decatur, IL unchanged at 15 cents over the December contract.


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