July corn was trading 5 cents higher late in the overnight session. Outside market forces were negative overnight but shifted to a more positive tone this morning with the US equity markets showing some strength and gold was higher again. The jump in wheat prices above corn reduces the need for wheat feeding and could boost corn usage into the summer. The trade is still counting on a big harvest in August to ease feedgrain tightness and traders still expect record yield. However, July corn continues to follow the strong cash market higher and December corn shorts are getting a bit nervous with a continued above normal temperature pattern for the Midwest which increases the need for timely rains. Talk of only light rains in the past week and the outlook for only a little rain in the coming week is beginning to provide some support. July corn closed higher yesterday and saw the highest close since May 1st as strength in the other grains and a bounce in gold was enough to offset another weak session for US equity markets. The market is up as much as 57 1/2 cents from Friday's lows finding support from a surge in wheat prices and continued strong cash markets. Weather concerns for wheat seemed to be the main driver. Traders believe there are improving chances of better rain coverage for the central Midwest in the extended forecast models so weather was considered negative yesterday. Producer selling is still light in spite of historically high basis levels and a strong premium of old crop to new crop corn. Net weekly export sales came in at 865,100 tonnes which was well below expectations for near 1.1 million. Old crop sales of 326,000 metric tonnes are needed each week to reach the USDA forecast. Argentina officials pegged the 2011/12 corn production at 20.1 million tonnes from 20.3 million as their previous estimate and compared with 21.5 million as the recent USDA forecast.
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