December corn traded a tight range overnight and surged to new highs in the early hours. The December contract is trading 5 3/4 cents higher as of 6:30 am CST. Overnight volume slipped after a noticeably thinner trade into the close yesterday. Dalian corn was slightly lower overnight. Outside markets are mixed this morning with the US Dollar trading slightly lower and stocks set to open marginally higher. Markets await Thursday's comments from the European Central Bank in hopes that a new plan to stem the debt crisis will calm market fears and force more stimulus into European economies. The Federal Reserve will also meet today but no action is expected to be taken by Fed officials. The corn market saw a mixed trade overnight after reaching new all-time highs yesterday. Volume began to fall late in yesterday' session, and it carried through to the overnight session. Open interest increased 10,541 contracts on the sharply higher move, which is supportive to bulls and could mean a continuation of the higher trend. Crop progress reports came in slightly below market expectations yesterday afternoon. The weekly Corn Conditions report showed 24% was rated good/excellent compared to 26% last week. The market was expected a loss near 3%. The lowest good/excellent rating was 20% in 1988. Illinois lost 2% to put their good/excellent rating at 5% which is 2 points away from their all-time low at 3% in 1988. Indiana actually gained 2% to put their good/excellent rating at 9%. This was likely due to recent rainfall in the northern half of the state which helped marginal acreage. Poor/very poor ratings increased by 3% to 48%. This exceeds the all-time high for this period at 47% in 1988. Iowa is now rated 46% poor/very poor. The US corn crop is all but done pollinating after the report pegged US corn silking at 94%. This would imply that any new rainfall across the US will likely have minimal impact on reversing yield loss. However, cooler temperatures will provide relief and at least stabilize crop losses for now. US corn export basis was steady to slightly weaker yesterday. Export demand for US corn remains extremely sluggish, as international buyers shift demand towards Black Sea and Brazilian corn. Declines in export basis levels were limited, as lower water on the Mississippi has slowed barge traffic and has forced river elevators to limit the amount of grain loaded onto barges. This is causing contraction in the supply pipeline to the Gulf of Mexico export elevators. Brazilian corn for August-September was reportedly offered at nearly a $36 per tonne discount to US Gulf corn. This offered resistance to US cash corn prices. A well-known commercial grain trading company suggested that US corn yield may range from 132-138 bushels/acre for the 2012/13 marketing year. This yield estimate is at the higher end of trade estimates. The market is trading a yield near 130 bushels/acre at the moment with some forecasts as low as 120. Some market participants are suggesting that this year's corn crop could be 20-25% below trendline, which would put the US national corn yield between 122-130 bushels/acre. This looks to be more consistent with recent price action and crop tour reports.
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