December corn was unable to make a new high overnight and traded down 16 cents as of 6:30 am cst. The contract is trading near the lows of the session, while Dalian corn traded 0.37% higher. Outside markets offer a slightly negative tone to the market with Crude Oil off $1.50, the U.S. Dollar trading higher again and renewed European slowing fears back in a front and center position again. Market participants have apparently digested the PBOC and ECB monetary actions, but without the U.S. Fed providing evidence of upcoming easing or the US payroll numbers coming in hotter than expected, it might be difficult to shed the "risk-off" vibe today. There were no reported corn deliveries overnight and July corn open interest sits at 4,540 contracts, while total open interest grew by 14,860 contracts after yesterday's trade. December corn traded sharply lower overnight and is down 19 cents near 6 am cst. This after corn set new yearly highs and closed in impressive fashion yesterday. Following yesterday's gap open higher for December corn and new highs for the move at 7.13, traders are taking profits overnight and this morning. Sell stops were triggered overnight and traders began positioning themselves following weeks of extensive gains on the heels of blistering temperatures across the Midwest. With the scorching temperatures expected to last into the weekend before cooling down early next week, traders are anticipating another 5-7% decline in corn crop ratings next Monday. However, a drop in good/excellent ratings of 8% or more would not be a surprise given the extreme heat and lack of significant rainfall this week. Current weather models suggest slightly better rainfall in the Delta and Southeast next week. Accumulation will most likely not amount to much, but some rain is better than no rain. No "drought saving" showers are expected in the eastern U.S, southern Midwest, and Delta next week. The most recent topsoil moisture ratings pegged Missouri, Illinois, Indiana, Kentucky, and Arkansas at extreme short/ to very short levels (97, 89, 91, 92, and 94 respectively). Attention should be given to the serious concern over further yield deterioration in these areas as the expected rainfall will be light, and will likely not improve topsoil conditions greatly. Furthermore, 50% of the corn crop will be near pollination by next week, further inhibiting the most critical stages in corn growth. The North China plains received good rainfall in the last week, which should help their corn production prospects. However, Ukraine is expected to trend drier over the next week which could set back corn production potential for that country. Brazil is expected to harvest a record corn crop near 69.48 million tonnes, which should provide pressure long-term to the corn complex. While setbacks are likely to occur in corn after this week's dramatic rally, the weather bull market could be difficult to extract. A steady, yet choppy trade higher from here could be the path of least resistance for corn until the market knows the full extent of the production damage.
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