July corn was trading near unchanged into 7:30 AM central time. Outside market forces look negative today with a strong US dollar and weakness in equity markets. July corn appears to be in a long liquidation mode as fund traders are already rolling positions to the new crop and this could continue just ahead. Open interest fell 7,656 contracts to 464,574. December corn seems to be consolidating recent losses and may have already priced-in a good rain event for later this week. With expectations of a record yield, the trade is growing concerned that the hot and dry trend of May will resume next week or the week after and that crop stress could emerge into pollination. The rains this week will alleviate topsoil dryness but it will take very timely rains to assume steady crop conditions. The weekly Conditions report showed that 72% of the crop was rated good/excellent compared to 77% last week and 63% last year. The 10 year average for this time of year is 66%. Traders were looking for a 2-4% drop. Indiana conditions fell 14% to 56% good to excellent and Illinois slipped 13% to 66%. Fund traders were noted as active sellers of more than 15,000 contracts yesterday. The downside break-out under the May 11th lows attracted increased technical selling yesterday as the much improved weather forecast which shows rain this week and next week helped to spark aggressive selling. The downside break-out pushed the market down to the lowest level since January of 2011. Ideas that short-term demand for US corn has dropped off due to reports of good yields in Brazil and cheaper Brazil corn on the world market compared with US corn has added to the negative tone. The Midwest looks to receive 1/2 to 1 inch of rain with 70-80% coverage into the weekend and the amounts expected are down slightly from yesterday. Weekly export inspections came in at 29.5 million bushels which was a bit higher than expected. Exports need to average 15.5 million bushels per week to reach the USDA projection for the year. The Ministry of Agriculture in Japan indicated that the ratio of corn in the feed mix fell to 44.3% in March which was the lowest of the past two decades. South Korea seeks 55,000 tonnes of US corn for October arrival. Buyers are moving away from feedwheat after the surge in wheat prices in the past two weeks and this may help improve demand.
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