December corn was up 1 1/4 cents late in the overnight session after trading as much as 17 1/4 cents lower. Outside markets look mixed today as both equity and energy prices are recovering from steep losses yesterday and overnight. The recovery in financial markets overnight sparked new buying in corn and a few other commodity markets and at least a slowdown in selling in other markets. Crop conditions fell more than expected, and traders began positioning for the key USDA production and supply/demand reports for Thursday morning. The weekly Crop Progress report, released after the close yesterdy, showed that 60% of the corn crop was rated good/excellent as of Sunday, down from 62% last week and 71% last year. Traders were looking for a 1% decline. Nebraska's conditions were up 2%, but Iowa was down 2% and Illinois was down 3% (to 50% versus 64% last year at this time). There is still a dry region in central Illinois which is supposed to get rain this week. Midwest weather looks favorable for the next 10 days. South Korea seeks 55,000 tonnes of US corn. China CPI crept up to 6.5% in July, led by a 14.8% rise in food prices. Their recent imports of pork and their measures to hold down pork prices might ease inflation pressures next month. Keep in mind, China is modernizing and expanding their pork industry, and feedgrain demand could grow significantly. With some areas of China seeing stress this summer, traders see a revision lower in China's corn production for the report Thursday, down from a record high 178 million tonnes estimated last month. Traders see the US yield falling by some 3 bu/acre from last month's estimate of 158.7, which could push production down nearly 400 million bushels from the 13.47 billion bushels estimated in July. Many traders see a further adjustment lower in September, as more and more of the pollination and "tip-back" issues are picked up by the USDA. Traders see world corn ending stocks falling another 1.5 million tonnes or so from the 115.66 million tonnes estimated last month. That was already a 5-year low. December corn closed sharply lower on the session yesterday but did manage to recover to close about 5 cents off of the early lows. This occurred despite the continued washout to the downside in the stock market, a $6 break in crude oil and further weakness in economically sensitive markets. The early pressure that resulted from across-the-board commodity selling helped drive December corn to its lowest level since August 1st. Talk of improving weather ahead added to the bearish tone, with talk of some rain and more normal temperatures for the next 10 days helping to pressure prices. The USDA reported that 120,000 tonnes of US corn was sold to Egypt for the 2010/11 season. Weekly export inspections of corn, released during the session yesterday, came in at 31.7 million bushels, which was about as expected but well below the average of 53.9 million bushels needed each week to reach the USDA projection. Weekend rains missed the central Illinois region. There has been no rain for 14 days in Champaign, Illinois and nearly 21 days in Normal, Illinois.
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