December corn is trading 2 1/2 cents higher near 7:30 am CST. The corn market bounced at the 5 pm, Sunday night open after soybeans surged to new contract highs following Friday's release of lower than expected soybean yields by a large crop tour last week. Grain markets are also seeing support from higher energy markets and fears that Tropical Storm Isaac will damage row crops in the southeast and Delta. European and Asian stock markets were flat to slightly lower after worse than expected economic data was released. The US Dollar is trading slightly lower against the Euro which is offering marginal support to US Commodities.
The corn market started the week with a positive tone following Friday's release of the US corn yield reported by last week's closely followed crop tour. US corn yield was pegged at 120.25 bushels/acre, plus or minus 1% vs. the current USDA estimate of 123.4. The yield was in line with market expectations. Production was estimated at 10.478 billion bushels which is down 301 million bushels from the USDA forecast and suggests further price rationing will be necessary to hold US ending stocks near a pipeline minimum level. Some in the trade feel the yield and production estimates may actually be lower than tour estimates due to the fact the tour did not move through the entire state of Missouri, Southern Indiana, and Southern Illinois and the possibility of further harvested acreage cuts.
Scattered showers across the Corn Belt over the weekend may delay harvest briefly but accumulation was expected to be light. Morning radar has storm systems moving through Southern Illinois, Indiana, and Southeast Michigan. All eyes are on Tropical Storm Isaac this morning as it nears the Gulf Coast. The storm is expected to pick up strength and hit Hurricane status by 2 am Tuesday morning. The storm has shifted west over the weekend and the projected path has it hitting the Louisiana and Mississippi coasts by Wednesday morning. It will then push as far north as Arkansas, Western Tennessee, Missouri, and Illinois. High winds and heavy rainfall could have a negative impact on maturing row crops in this area.
The Commitments of Traders reports as of August 21st showed Non-Commercial traders were net long 375,801 contracts, an increase of 32,495 contracts for the week. Non-Commercial and Non-Reportable combined traders held a net long of 291,523 contracts, up 36,317. The record net long position held by these traders is 366,547 on October 10th, 2010. Trend-Following Funds (Non-Commercial Net of Index Funds) hold a net long of 280,642 contracts, up 35,262 contracts for the week. Total long CBOT Grain positions, for Non-Commercial and Non-Reportable combined, hit a new recorded high at 592,075 contracts.
Cash corn markets were steady to firmer at the close of business Friday. August barge bids to the Gulf of Mexico have bounced near 40 cents over the September contract. South American and Black Sea corn continues to be offered at a discount to the US but slow transit times to the export terminals due to the low Mississippi River levels has strengthened cash values. The storm surge and a push toward Illinois could at least temporarily ease low river concerns.
Crop conditions ratings released later this afternoon are expected to be steady to slightly lower. Warm weather last week may have negatively impacted corn conditions however most in the trade are putting less importance in the condition ratings at this point as harvest has begun and yield reports begin to circulate around the market. The harvest pace should begin to pick up dramatically this week if weather cooperates.
*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.