December corn was up 3 1/2 cents late in the overnight session. Outside markets look somewhat positive with a weaker US dollar and strength in equity markets. Dryness in parts of eastern Iowa, western and central Illinois and scattered other locations helped to support the market overnight, as did with positive outside market forces. Traders seemed to believe the USDA yield estimate, but they were hoping for a setback in prices to buy. The USDA did not publish or comment on the ear population per acre, which is generally used as an indicator for yield when other developments are lacking. Traders see the positive cash flow for cattle and hog operators and the recent strong demand for ethanol production as obstacles to lower demand ahead, and they feel that prices have yet to move high enough to slow demand. This is especially true if there are further revisions lower in production. Since 1975, there have been 18 years in which the USDA lowered their production forecast for the August crop report. In 14 of these 18 years, there was a further adjustment lower in the production for the September report. December corn closed slightly higher on the session Friday and up 11 1/2 cents for the week. Ideas that the market is a bit overbought after the surge higher on Thursday plus some profit-taking selling after a very volatile week in financial markets helped to spark a minor sell-off from the mid-session highs. With crops in Illinois rated 50% good to excellent as compared with 64% last year, traders are questioning the USDA Illinois yield estimate in Thursday's report at 170 bushels per acre vs. 157 yield last year. Traders see a 1% decline in crops rated good to excellent for this afternoon's update. The Commitments of Traders reports as of August 9th for Corn showed non-commercial traders were net long 294,667 contracts, a decrease of 4,041 contracts for the week. The selling trend is seen as a short-term negative force. Non-commercial and nonreportable traders combined held a net long of 198,576 contracts, down 3,387. Commodity index traders held a net long position of 354,187 contracts, down 14,714 for the week.
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