December corn is trading 11 cents higher near 7:30 cst. The corn market traded sharply higher just after 5 pm, Monday after crop conditions ratings were worse than market estimates. November Dalian corn traded up 0.13%. U.S. stocks are trading slightly higher while the U.S. Dollar is marginally weaker. Commodities have rebounded this morning in anticipation of a European Central Bank interest rate cut this week. There were no reported deliveries made in Chicago corn overnight. Worse than expected crop condition ratings sent corn 10-20 cents higher overnight, and 1 1/2 cents under the August 2011 high of 6.73 1/2. Bulls quickly pushed corn up 20 cents at the 5 pm cst open but action was steady for the remainder of the evening. The weekly Corn Conditions report showed 48% of U.S. corn was rated good/excellent compared to 56% last week and 69% last year. The 8% decline trumped market estimates of a 5% revision and this was the largest drop in good/excellent ratings, on record, for the week ending July 1st. Indiana is 50% rated poor/very poor. Missouri, Kentucky, and Indiana all now have very poor ratings of 19%. The market is now trying to establish what yield potential is, as the trend line yield (160.50 bushels/acre) seems highly unlikely. The US crop was 25% silking on Sunday vs. the 5 year average of 8%. It is estimated that corn may lose 40-50% of it's yield if exposed to 4 days of extreme stress during silking. Irreversible damage to yield has likely already been done to corn in Illinois and Indiana as 46% of the Illinois crop and 30% of the Indiana crop was silking by Sunday and even more should be pollinating by late this week as heat builds. Highs of 100 degrees or more were seen in the central and southern Midwest last weekend, temperatures yesterday and today could reach 95-100 degrees for those same areas. Chicago is expected to reach 100 this week but cool down to 85 by the weekend and into next week. Some U.S. weather maps show a chance for 0.50 to 2 inches of rain from July 8th-17th in the eastern and southern Midwest with a ridge shifting west which could move the above normal heat to the western plains, while the east sees some relief. Confidence is low in this forecast as it has been disappointing farmers and traders for the last month. New crop yield estimates are beginning to drop further with the low end at 145 bushels/acre. Plugging in a 149 bushels/acre yield (2011/12 yield was 147.2) and lowering demand by 350 million bushels would imply a 2012/13 carryout of 747 million bushels and stocks/usage of 5.6%. This would be the second lowest stocks/usage since 1960/61. Old and new crop corn demand continues to be sluggish, but the U.S. did manage to sell 110,500 tonnes of corn to Mexico for 2012/13 delivery. It is also thought that Argentina will continue to release more corn available for export soon. Brazil corn exports for June rose to 134,900 tonnes vs. 165,700 in May. The June export pace was more than 10 times the amount exported in June 2011. It seems the escalation in corn prices over the last couple weeks has been successful in stemming any further demand increases for the time being. Corn used for ethanol hit a 9 week low last week and while China has been active in the soybean market, they have not been heard of showing any interest in U.S. corn as of late. However, the market action is assuming continued poor weather and yield, so the trend remains higher at the moment.
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