December corn bounced overnight and is trading 4 1/2 cents higher near 7:30 am CST. The corn market opened up steady at 5 pm last night but gains were extended near 3:30 am. European stocks edged lower as a working group led by Germany's deputy finance minister discusses the economic impact if Greece were to leave the Euro zone. US treasuries saw marginal gains against a slightly higher US Dollar. The market remains in a volatile consolidation. The corn market edged higher overnight following yesterday's steep loses. Technical profit taking and unwinding of bull calendar spreads forced December corn to a fresh 3 day low yesterday. Volume was slightly higher than the day prior with 277,600 contracts trading and open interest declined by 7,174 contracts. The revision lower in open interest suggests many traders took profits on long positions on the move lower.
This week's crop tour pegged the Iowa corn yield at 137.3 bushels per acres vs. the current USDA estimate of 141. The tour's three-year average is 171.7 bushel per acre. The Minnesota corn yield was estimated at 156.2 bushels per acre, which was slightly higher than the USDA's projected yield of 155. The tour's yield fell below their three-year average of 182.2. The tour cited disappointment in the Minnesota corn conditions as the state saw slightly better rainfall in July then areas to the south. However, heat and dryness in early August have deteriorated crop conditions. The tour will wrap up today and provide a final yield for the US corn crop.
The 6-10 day weather outlook has a high pressure ridge setting back up in the west which should leave most of the central and western US warm and dry. Limited rainfall shifts to the northern and northwestern Midwest and any precipitation in the central Midwest will likely be light and scattered. Harvest conditions remain ideal for most of the Midwest. Tropical Storm Isaac is near Cuba this morning and is on a northwestern track towards the southern tip of Florida. The storm is expected to pick up speed and strength as it enters the Gulf of Mexico and has the potential to greatly impact the Gulf Coast region. The Tropical Storm will have limited benefit to row crops in the Delta and Southeast as they are well past the critical stages of growth. However, the rainfall could replenish top soil moisture for Soft Red Winter Wheat planting.
Significant changes to the world corn balance sheet will probably be needed on the next USDA report. The International Grains Council cut world production by 26 million tonnes to 838. This is 11 million tonnes lower than the current USDA estimate. The revision was largely due to the decline in US production. Russian officials have also cut their grain production outlook to 75 million tonnes vs. previous estimates of 75-80 million tonne. Even before the revisions, the USDA ending stocks for corn represent just 52 days of global usage which is the tightest since 1973.
Corn basis remains mixed across the Corn Belt. Bids rose 20 cents at a large commercial elevator in Ohio yesterday. However, bids fell 10 cents at an Iowa processor. The higher trade early this week has spurred some grain movement in the country and harvest pressure may limit gains in basis for some areas of the Midwest.
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