December corn is trading 5 cents higher near 7:30 am CST. The new crop contract traded in a steady range for most of the night but turned higher as European markets opened. Worse than expected reports from a crop tour yesterday was supportive to the overnight trade. Dalian corn was higher overnight. European stock markets and the Euro opened stronger overnight on optimism over Greece's financial outlook and on hopes that the ECB will begin purchasing sovereign bonds to stabilize the Eurozone. The US Dollar traded weaker overnight which lent support to US commodity markets. December corn made a new high for the move overnight on the heels of worse than expected yield reports from a crop tour that is being closely followed by industry experts and traders. The weekly Corn Conditions Report showed 23% of the US corn crop was rated good/excellent, unchanged on the week and compared with the 10 year average for this time of year at 60%. The lowest rating for this time of year was 16% in 1988. The ratings were in line with market expectations but traders took little comfort in this as yields continue to be reported well below market estimates. States in the northern and eastern fringe of the Corn Belt continue to report the best ratings while top producing states in the central and western US struggle. The Weekly Corn Harvest report showed 4% of the harvest is complete compared 1% last year and 1% as the 10 year average for this time of year. Harvest is wrapping up in the Delta and should heat up in the central and eastern Corn Belt over the next 7-10 days.

The market is keeping a close eye on reports from the crop tour that began yesterday. After day 1, the group saw the average South Dakota corn yield at 74.3 bushels per acre, which was down from the tour's 3 year average of 143.9. This is also the lowest yield since 1993. Obvious signs of drought and stress damage were seen. Crop scouts also reported that many fields were waiting to be checked by crop insurance adjusters and had been cut for silage as hay prices surge. The western leg of the tour will move through Nebraska today. In addition, a second group began their route in the east and pegged the Ohio state average corn yield at 110.5 bushels per acre vs. the current USDA estimate of 126. The 3 year average is 160.5. The eastern leg of the tour will move through Indiana today and the trade expects much of the same, if not worse.

China's July corn imports rose to a 6-month high at 721,516 tonnes. Industry experts suggest most of the purchases were made at the beginning of this year or last year. The recent surge in US corn prices has moved China to the sideline as they look to purchases corn from other suppliers like South America or Ukraine. As of yesterday, Brazilian corn was nearly a $35 per tonne discount to US corn, basis the Gulf of Mexico. China corn imports are expected to soften over the next quarter as they begin their new crop corn harvest and plan on releasing old crop reserves to the market place. However, there is concern that a large Tropical Storm which is expected to grow into a Typhoon next week, could threaten 20% of their corn crop due to wind damage and flooding.

Export inspections for the week ending August 16th for the 2011/12 marketing year in corn were pegged at 21.51 million bushels vs. 22.27 the week prior. Corn inspections continue to lag the pace needed to reach the current USDA estimate with 33.1 million bushels needed each week. Current inspections are 95% of the USDA estimate for 2011/12 vs. the 5 year average of 94%.

On a slightly bearish note, The EPA announced late yesterday that it will begin to review state requests to suspend the ethanol mandate. A 30 day period of public comment will be held and the EPA has a 90 day period to make a decision with regards to the waiver applications filed by North Carolina and Arkansas.

View All Market Commentary 

*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.