December corn is trading slightly lower near 7:30 am CST and there were no September corn deliveries overnight. Dalian corn traded slightly lower overnight. Corn was under pressure for most of the evening but is seeing a bit of support from the wheat market this morning following yesterday's sharp losses. All eyes are on the Federal Reserve today as they finish their 2 day meetings. Most investors feel a new round of QE will be announced to jump start the US economy. The US Dollar is trading lower this morning in anticipation of the decision and crude oil is slightly higher.

Corn continues to feel the headwinds of yesterday's USDA report where the US average corn yield was pegged at 122.8 bushels per acre, which was slightly lower than the August estimate. The better than expected yield, along with the increase in 2012/13 carryout sent the bulls to the sidelines. Some traders believe that current price levels have rationed enough demand for now and that the weak cash markets, along with the fact corn seasonally trends lower from here could result in further downside.

The stocks to usage ratio for US corn was pegged at 6.5%, a new 17 year low, however what may have been the major surprise to bulls was the fact harvested acres were not touched. Many in the trade were expecting a decrease of 1-1.5 million acres. While it is still possible for the USDA to revise acres lower, the September report seemed to be the most opportune moment given the crops maturity and the rate in which harvest is progressing.

Very few changes were made to the world corn balance sheet. The USDA left Ukraine production and exports unchanged at 21 and 12.50 million tonnes respectfully. Many in the trade feel Ukraine production is near 17-19 million tonnes due to their own drought which has damaged wheat crops significantly. China, Brazil, and Argentina corn production was left unchanged but European Union production was slashed by nearly 4 million tonnes to 57.17. A private European analyst revised their European Union corn production lower to 53.5 million tonnes this morning citing dry and hot conditions. This was down 4.3 million tonnes from last month and 19% lower than the 2011/12 crop year.

Harvest should progress nicely in the eastern Corn Belt and Southeast to finish the week and into the weekend. Storms are rolling across the western Corn Belt as we speak and are tracking as far north as Wisconsin. The rain may delay harvest in areas of Nebraska, Iowa, and Illinois as they move east today but disruptions will remain minimal and localized.

Basis in the Gulf of Mexico firmed yesterday on tight supply and after farmer sales slowed due to the recent lower price trend. The strength is expected to be short lived as harvest moves along and due to the fact export business is slow. Decatur, IL is bidding 28 cents over the December contract and Des Moines, IA is 20 cents under the December contract.

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