December corn is trading 3 cents higher near 7:30 am CST and there were no September corn deliveries overnight. Dalian corn traded lower overnight. December corn saw a healthy bounce off yesterday's lows overnight on support from a lower US Dollar. European equity markets fell for the second straight day but "risk on" asset classes like energies and metals traded stronger in the US as investors look ahead to this week's FOMC meeting where it is widely expected a new stimulus program will be announced.
December corn closed down nearly 2% on Monday but managed marginal gains overnight on the heels of a stronger wheat market and after the weekly Corn Harvest report showed 15% of the harvest was complete compared to 10% last week and 5% last year. The trade expected a number near 17%. The 10 year average for this time of year is 7%. Most southern states are nearing complete and the central Midwest should show huge strides by next Monday given the beneficial weather forecast. Condition reports are becoming less relevant with each passing week after it was reported that 58% of the crop is now mature vs. 41% a week ago and compared to a 5-year average of 27%. The fact that 22% of the crop was rated good/excellent compared to 22% last week and 53% last year holds significance since the better weather in August obviously offered very little, if any, benefit to the corn crop. Normally this time of year condition ratings see a late bounce but the maturity level of this year's crop is so advanced we likely won't see any such trend. Slight improvement was seen in eastern Corn Belt states but this was largely offset by the downgrades in the western Corn Belt. The 5 lowest rated states include Missouri, Kentucky, Illinois, Kansas, and Indiana.
Harvest weather looks good this week with scattered showers for the central Midwest but nothing to suggest any major delays in harvest. A depression has developed just east of the Caribbean Islands and the National Weather Service states it has a 90% chance of becoming a Tropical Cyclone with a North/Northwestern track. The storm should be monitored. Internationally, Argentina is dealing with massive flooding and parts of Brazil remain drier than normal. The flooding in Argentina will not have a major impact on crops except barley and wheat, however some corn acreage is likely lost. Central Brazil remains extremely dry with the last rainfall in Mato Grosso occurring 115 days ago. The delay in soybean planting for this region could have broader implications on the Safrinha corn crop which is typically planted just after soybean harvest. If delayed, this could cause significant yield damage.
Corn basis at a processor near Chicago dropped 25 cents yesterday as harvest picks up speed. Decatur, IL corn basis was unchanged at 28 cents over the December contract. Reports of long lines and waits at facilities are beginning to circulate as commercial companies check loads for afflatoxion, which is becoming more common as harvest rolls along. Calendar spreads continue to unwind as harvest approaches with the December contract now trading 4 cents under the March and the spread was inverted just 2 weeks ago.
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