December corn posted it's lows for the overnight session at 6.28 and slowly rallied through the night. The new crop contract is trading 8 cents higher as of 7:30 am cst. Dalian corn traded down 0.16% for the second consecutive day while U.S. stocks are trending slightly lower. The U.S. Dollar is higher after the Euro currency sank overnight following Germany's release of it's 4th straight increase in unemployment. As European leaders meet in Paris to discuss their fiscal dilemmas, there is a sense of anxiety and nervousness in the corn market this morning. Corn continues to show its ability to shake off any signs of weakness as the likelihood of lower corn yields weigh on traders' minds. The weather maps show scorching temperatures for the central and southern Midwest to finish out this week, followed up with another round of 90 to 100 degree temperatures next week. Iowa, northern Illinois, northern Indiana, Wisconsin and Ohio could see a half inch to an inch of rain but for now, the system stays to the north, leaving the driest portions of the Corn Belt with no rainfall. The updated U.S. Seasonal Drought Outlook shows drought conditions will persist or intensify for Kansas, Missouri, western Nebraska, central and southern Illinois, Indiana, and the central third of Iowa. The outlook also shows drought development is likely to occur over the same period for eastern Nebraska and western Iowa. This morning, a string of showers are moving across southern Minnesota and eastern Iowa, providing very limited relief. The question in the market is not if the crop conditions or yield will be revised lower, but by how much. A University of Purdue Agronomist was quoted as saying, One inch of rain every 5 days is needed in the early stages of corn development. One inch of rain every 2 to 3 days is needed during pollination. Bottom line, while the half inch to one inch of rain is welcome in the northern Corn Belt, consistent levels of rain and wide spread coverage is needed. The only weak fundamental in the corn market continues to be the demand side of the balance sheet. Yesterday's Ethanol Production Report showed corn use for the week ending June 22nd was just 94.06 million bushels, a 9 week low. The weak ethanol margins have reportedly shut down another Valero ethanol plant, the second this month, in Indiana. More of this is sure to come if corn pushes towards 7 dollars. Exports sales will be released this morning and are expected to be near 350,000 tonnes as cheaper corn is available in Argentina and Brazil. The USDA will release their Grain Stocks and Planting Intentions report Friday. The trade expects a slight increase in corn acreage, however traders will key off the stocks estimate. The trade expects June 1 stocks of near 3.17 billion bushels with range of estimates as wide as 670 million bushels. This sets the market up for volatile trade on Friday.
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