December corn was up 10 1/2 cents late in the overnight session. Outside markets look positive today with a weaker US dollar and strength in energy and metal markets. Trade focus is quickly shifting to the USDA Crop Production and Supply/Demand report for release Thursday morning. Outside market forces are turning more positive. While some traders see the USDA counting stalks and using average ear weights to determine yield, others see serious pollination issues and expect the USDA to pick up on the poor yield outlook. The USDA pegged yield at 158.7 bu/acre last month, and most estimates are near 155 for this report. The USDA pegged yield at 165 in August last year only to see actual yields drop to 152.8. The recent slower demand tone has traders looking for an adjustment higher of about 40 million bushels in beginning stocks. Demand revisions lower are expected to partially offset the production declines. Traders see ending stocks for the 2011/12 season down about 120 million bushels from the 870 million projected last month. Production is expected to be revised down nearly 400 million bushels from 13.470 billion bushels in July. Many traders see a further adjustment lower in September as more and more of the pollination and "tip-back" issues are acknowledged. Traders see world corn ending stocks falling another 1.5 million tonnes or so from 115.66 million tonnes forecast last month. That was already a 5-year low. December corn closed slightly higher on the session yesterday and saw a nearly 20 cent rally from the overnight lows, as "less" volatile financial markets and continued concerns for lower yield helped to support buying ahead of the reports. The surge higher in the stock market lent support. Brazil lowered their corn production forecast for the 2010/11 season to 56.3 million tonnes, down from last month's estimat of 57.1 million but up from 56 million last year. South Korea bought 55,000 tonnes of US corn overnight. There is a very dry pocket in central Illinois, where yield potential is thought to be declining. The forecast offers just scattered rains for this region. Cool and sometimes wet weather for the next week is seen as beneficial to the crop, but another hot and dry dome is threatening for the western corn belt for later next week.
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