December corn is trading 19 1/2 cents higher near 7:30 cst. The corn market traded sharply higher just after 5 pm, Sunday night on continued concern over weather conditions and yield deterioration. Calendar spreads are firm with the September vs. December spread trading a penny higher at +5 1/4 the December contract. September Dalian corn traded up 0.08%. U.S. stocks are trading slightly higher while the U.S. Dollar is a bit stronger. Outside markets remain positive after European leaders surprised the markets Friday with their plan to inject capital directly into troubled banking institutions from their rescue fund. The corn market continued it's impressive, 11 day old rally overnight. December corn posted a new high for the move at 6.64 and is approaching levels not seen since August of 2011. July corn is giving back some of its gains to September after no delivery intentions were issued on Friday but bull spreads are firm this morning, offering underlying support to futures. Corn open interest was down 3,060 contracts after Friday's trade, with the bulk of the change being reflected in the July contract as traders roll out of front month positions. The updated Commitment of Traders Report, for the week ending June 26th, showed trend following trader's sharply increased their net long positions. Since June 12th, trend following traders have increased their net long positions by 53,515 contracts following months of deleveraging. Trend-followers are now net long 50,539 contracts, up 29,652 contracts for the week. Non-Commercial and Non-reportable combined traders held a net long position of 64,469 contracts, up 56,958 contracts for the week. Furthermore, within the 83,491 non-financial contracts bought last week by trend following traders, 82,280 contracts were in the grain complex. This data shows the appetite of the speculative community after months of liquidation and risk off sentiment. The USDA reports were quickly moved aside on Friday and the market shifted their focus back to a threatening weather outlook. Adding fuel to the fire, a major financial institution announced they were decreasing their average corn yield for this year to 153.5 from 160 bushels per acre. The cut falls in line with the rest of the market at this point in time. Weather remains the driving force behind the sharply higher corn trade as we dig deeper into the pollination stage of corn. With nearly all of the Midwest experiencing 90 to 100 plus degree temperatures last week, the U.S. Midwest is bracing for more of the same this week. Last week, 1,800 record highs were set in 39 states ranging from Denver, Colorado to Fort Wayne, Indiana. Des Moines, Iowa is not expected to see temperatures reach below 90 this week and the heat index could reach 117 degrees by Friday. Decatur, Illinois is expected to see similar temperatures. Weekend storm systems moved on their expected path through Iowa, Northern Illinois, Northern Indiana, and Ohio. Accumulations amounted to a quarter inch to one inch in most areas but with already dry soil conditions and 100 degrees temperatures this week, this accumulation will vanish quickly. With crops in the southern half of the belt pollinating in the next 10 day, a lack of rain in some areas could be devastating to yield. By using a 152 bushel per acre yield, and keeping demand unchanged from the last USDA report, this would imply a stocks to usage ratio of just 7.9%. Keep in mind that if July weather conditions are similar to those of June, a 152 bushel per acre corn yield will be on the high end of market expectations. Today's crop progress reports are expected to show sharply lower revisions in states like Indiana, Illinois, and Missouri. Ratings will also likely be decreased for Nebraska and Iowa after experiencing scorching hot temperatures the last two weeks.
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