Pre-Opening Corn Market Report for 6/25/2012

July corn was trading 17 cents higher near 7:30 cst with Dec up 22 1/4. Dalian corn was up 0.7% overnight. U.S. stocks and the Dollar are offering resistance this morning, along with energies. Warm and dry weather continues to fuel the corn weather rally. December corn gapped higher overnight which is sometimes seen as a powerful technical action. The corn bulls bought the open after Tropical Storm Debbie failed to extend to the Corn Belt and weekend weather forecasts called for blistering temperatures for nearly all of the Midwest this week. Temperatures in Chicago are expected to reach 100 degrees by Thursday. A high pressure ridge will be set up in the west which should push temperatures in parts of Kansas, Oklahoma, and Texas into triple digits. Central Iowa is expected to reach 100 degrees for the first time since 2006. Reports of corn tasseling in Missouri and other areas of the southern Midwest during 100 degree temperatures days is beginning to solidify thoughts that even a 160 bushel per acre yield is too generous. The North China Plain saw traces of showers over the weekend but with 90 to 100 degree temperatures, they'll need just as much rain as the U.S. crops. Rain this week is expected to ease stress in China. The continuation of a warmer and drier than normal weather trend into pollination in the US leaves near 1/2 of the corn crop under stress going into pollination which could result in a continuation of the rally and another leg higher. While corn continues to ratchet higher, domestic and international demand seems to shrink by the day. More reports of poor ethanol margins and international interest in Black Sea or South American corn will likely pressure the corn basis as well as the July vs. December calendar corn spread (new lows this morning at +32 1/2 July). Crop progress reports, released at 3 pm CDT today, will almost certainly show downgrades for much of the Corn Belt. Most market participants feel a 3 to 5 percent drop in the "Good to Excellent" corn ratings is necessary. The USDA will issue their June 1 Grain Stocks and Planting reports on Friday. It should be no surprise but The Commitments of Traders reports as of June 19th showed Non-Commercial traders were net long 120,042 contracts, an increase of 26,474 contracts for the week. The aggressive buying trend is seen as positive.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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