December corn is trading 1 3/4 cents lower near 7:30 am CST and Dalian corn traded down sharply (down 1.62%) overnight. Overnight grain markets began with a weaker tone but found support on stronger trade in the wheat complex. Soybeans led the way lower and the trend intensified once Chinese markets opened weaker near 8 pm cst. The remainder of the night had a risk off tone and weak European markets added to the negative tilt. Germany released a poor IFO business survey for September which sent the Euro lower against the US Dollar. The strong dollar is adding to the weaker commodity trade this morning.

Last week's choppy, two-sided trade carried over the weekend to this morning and the broad-based outside market negativity is adding to the ugly start to the week. December corn continues to chop sideways ahead of this week's grain stocks report and is now more than $1.00 off its contract highs from early August. Despite the sharply lower trade in soybeans the last 2 weeks, corn has managed to hold up rather well against the weakness and consolidate, mostly on the support from a stronger wheat market.

Volume for corn on Friday was 160,687 contracts and a marginal revision lower was made to open interest. Open interest remains below year ago levels which is surprising given the open ended monetary policies by the fed and to a larger degree, the disastrous crop conditions we've seen all year. The Commitments of Traders reports as of September 18th showed Non-Commercial traders were net long 323,841 contracts, a decrease of 13,001 contracts for the week and the long-liquidation selling trend is seen as a short-term negative force. Non-Commercial and Non-Reportable combined traders held a net long of 223,004 contracts, down 26,150 for the week. The record long position ever held by these traders is 366,547 contracts. Trend-Follow Fund positions (Non-Commercial net of index funds) were pegged at 214,070 contracts which were down by 25,803 contracts for the week and well below the record long position ever held at 372,756 contracts.

More favorable weather conditions in South America have added ammo to the bear camp this morning. Weekend showers were seen in parts of Mato Grosso, Sao Palo, and northern Matto Grosso Do Sul. Occasional showers are expected to continue this week and in the 11-15 day period for northern Brazil. More showers will be needed for about a quarter of the first crop corn areas in October to alleviate some of the drier than normal conditions that persist. Weekend harvest weather in the US was good with brief interruptions in areas of Wisconsin and Michigan. Rainfall may increase in areas of the Southern Midwest and Delta in the middle of this week but a return to drier conditions will follow. The trade expects corn harvest near 40-45% complete in this afternoons Harvest Progress report. By the end of this week, harvest could certainly be near 50% complete.

Corn basis remains mixed across the US Corn Belt but bids in the Gulf of Mexico for export have firmed considerably as commercials attempt to pull grain from processors in the interior. October through November barges were bid 69 cents over the December contract. Exports remain weak but corn has widened its discount to wheat which could pull more feed demand its way. South Korea bought 65,000 tonnes of corn overnight and rejected all feed wheat offers. Ethanol processor bids remain strong despite their negative margins. Decatur, IL bids were posted at 25 cents over the December contract and Burns Harbor, IL corn bids rose 8 cents per bushel to 12 cents under the December contract.

 

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