December corn is trading 6 cents higher near 7:30 am CST. The higher trade is linked to a drier than expected weekend for much of the Midwest and reports of lower than expected corn yields as harvest progressed across the Corn Belt. Dalian corn was slightly higher overnight. European markets traded slightly lower overnight following last week's strong performance. The Euro nudged higher and the US Dollar is trading lower early this morning providing support to the US commodity sector. December corn continued it's rally from last week and is now back to trading near it's pre USDA report levels from early August. The higher trade reflects market fears that the US corn crop continues to shrink and slightly supportive outside markets are adding to the positive tilt. While weather is much less of an issue for the corn crop at this point, the lower than expected yields that are being reported across the southern Midwest suggest further demand rationing may need to occur as the supply outlook continues to tighten in the US. Corn basis was steady in the interior US going home on Friday after seeing gains earlier in the week. Interior ethanol facilities continue to source new crop bushels from the southern Delta but this will slow as harvest moves north and west. Gulf of Mexico cash markets ended the week slightly firmer but weak export sales and the fact that South American corn is trading a heavy discount to the US should keep gains limited. Support could come from lack of farmer selling during harvest in the central Midwest and Mississippi River water levels that are far below normal, causing slow barge transit times to the Gulf of Mexico. A closely followed crop scout will kick off their week-long tour today. The tour received record attendance this year and industry experts will be attending. The market action today and the rest of this week will remain choppy and two-sided as traders monitor reports out of the field. The trade may not be as surprised about the reduced yield as they will be with the amount of corn being cut for silage and land that has been zeroed out by insurance adjusters. The USDA currently has harvest corn acreage at 87.4 million acres but some traders believe this number is actually as low as 83 million acres. The Commitments of Traders reports as of August 14th showed Non-Commercial traders were net long 343,306 contracts, an increase of 16,775 contracts for the week. Trend-Following Funds (Non-Commercial net of Index Funds) hold a long of 245,380 contracts, up 17,775 from the week prior. The largest position ever held by these traders was 372,756 contracts from September, 2010. Japan's usage of corn for feed fell for the 6th straight month to a 20-year low in June. It is estimated that Japan imports nearly 16 million tonnes of corn per year, but a decline to nearly 15 million tonnes is estimated by the trade.