March corn was trading 4 cents higher late in the overnight session. Outside market forces were slightly positive today, but most financial markets were quiet ahead of employment numbers for release this morning. Increased concerns for major permanent damage to the South America crops ahead of the rain next week, a drier forecast overnight for next week compared with yesterday's models and a lack of evidence of a shift in the weather pattern helped to support the market overnight. Traders see improving US exports of corn due to the South America crop problems plus the possibility of adjustments lower for US production and higher for US feeding demand for the January 12th reports as potential positive forces as well. Tightening US and world ending stocks are now expected for the reports next week. March corn closed sharply lower on the session yesterday with fund traders noted as aggressive sellers. The outlook for a more active rain event for Tuesday/Wednesday of next week was seen as the main reason for the weakness. A turn down in outside market forces and a surge higher in the US dollar to the highest level since December 14th helped to spark long liquidation selling and a sharp break. Talk of the overbought condition of the market added to the negative tone, as speculators moved to the sidelines ahead of the weekend for fear that the weather forecast would improves again over the weekend. Officials from the key producing state of Parana in Brazil pegged the corn crop this year at 6.4 million tonnes, which is down from a December forecast of 7.4 million tonnes, due to dry weather. Brazil's Rio Grande do Sul state sees corn output cut by 25% and soybean output down 4% due to drought. Ethanol production for the week ending December 30th averaged 963,000 barrels per day. This was up 0.1% from last week and up 6.53% from last year. Total Ethanol production for the week came in at a record-high 6.741 million barrels. Corn used in last week's production is estimated at 102.58 million bushels. Corn use needs to average 95.3 million bushels per week to meet this crop year's USDA estimate. Stocks were 17.94 million barrels. This is up 1.53% vs. last week and up 6.45% vs. last year. The hot and dry forecast in Argentina through Tuesday of next week continues to help provide some underlying support. Traders will be monitoring estimates for next week's key USDA reports and also weather forecasts today and Sunday night.
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