Pre-Opening Corn Market Report for 8/4/2011

December corn was trading 12 cents lower late in the overnight session. Outside markets look bearish today, as fund traders appear to be active sellers in commodity markets due to a sharp run higher in the US dollar and weakness in energy and equity markets. The short-term weather outlook shows cooler temperatures and some rain for most areas of the Midwest and Delta and even parts of Kansas, but some parts of the central Corn Belt could see 1/2 inch or less, which may not be enough to boost crop conditions after the recent heat and dryness. Most of the northern half of the Corn Belt has seen good rains recently. Uncertainty on global economic conditions is keeping futures volatile, and the negative influences from outside markets have been offset recently buy a wide variety of yield reports from the country. Some areas of the Midwest are reporting pollination problems and especially tipping issues, which could lower yield expectations. Others are reporting better yield potential, especially in northern Corn Belt areas. A forecast from a weather service of a 150 average yield sparked concerns for extreme tightness ahead. Uncertainty on harvested acres, uncertainty on yield, and signs of weakening commodity demand are factors which have contributed to the volatile price action. December corn closed slightly lower on the session yesterday, as a lack of new grain news and less pressure from outside market forces helped keep trade choppy. Traders see weekly export sales in this mornings report coming in around 1 million tonnes as compared with 473,800 tonnes last week. A lack of aggressive follow-through buying following the limit-up move Tuesday sparked some profit-taking selling early in the session yesterday. Ideas that cooler weather and rain in the forecast for the weekend and next week could ease crop stress and stabilize yield loss was also seen as a reason for some of the selling. However, the negative weather news may have been partially offset by recent hot weather in southern Iowa, Missouri and southern Illinois and a little less rain in the short-term forecast which could leave some Midwest fields under stress into next week. Talk of a short-term overbought condition with December corn up as much as 53 cents from Friday's lows may have also sparked some selling. Ethanol production for the week ending July 29th averaged 878,000 barrels per day. This was up 0.46% form the previous week and up 0.57% from last year. Total Ethanol production for the week was 6.146 million barrels. Corn used in last week's production was estimated at 93.5 million bushels. Using the weekly data, the corn used for ethanol production so far this crop year totals 4.49 billion bushels. Corn use needs to average 117.9 million bushels per week to meet the USDA projection for the season. Unless there is a significant change in yield calculations for the industry, the USDA may be in a position to lower their usage estimates for the season.

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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