The corn market traded up into new 8 month highs on Monday as traders continue to hear about disappointing early yields and the underlying demand for exports and ethanol. The December contract closed up about 5-6 cents which was near the lows of the session as soybeans and wheat broke later in the day and pulled corn lower. The corn market opened higher as wheat lead the grains trading as much as 30 higher early in the morning. After the initial push higher, corn settled in a 2-3 cent trading range the rest of the day. We are continuing to hear about yields 20-40 below average in southern IL and that seemed to help corn gain some momentum as it tries to take out the highs from January which will be very important if corn expects to continue to move higher. As the market tries to figure out how good or bad the yields will be this year, we will continue to see volatility. We are beginning to see traders try and position themselves for a reduction in yields by the USDA in the next report on September 10th as most believe the USDA will have to adjust. Traders were also looking toward the crop progress that was expected to show a decrease in the good to excellent numbers of 1-2%, especially in Illinois. The volume was pretty big at 358,000 contracts and funds were buyers of about 10,000 contracts.

Overnight, the corn market opened slightly lower, moved sharply lower before recovering some of the losses by the time the market closed this morning. The December contract closed down about 3 cents, but that was almost 6 cents off the lows as corn traded almost 10 cents lower. The crop progress released after the closed left the good to excellent category unchanged from the previous week when the market was expecting a decrease of 2%, catching the market off guard, thus the sell off. It will be interesting to see how we close today as corn was lower last night, but quickly found buying and closed well off the lows. There is a lot of talk about reducing the national corn yield that we are seeing end users and exporters protecting themselves by buying corn now. The margins on ethanol are extremely profitable right now as well and that is helping to keep prices higher. The corn market will be called slightly lower this morning, but the outside market have improved since the grains closed with the crude off the lows and the US$ lower. I don’t know what affect this will have on the grains, but with the lack of new news, traders will be looking. The USDA announced sales of 100,000 mt to unknown destinations for delivery 10/11.

Globex Overnight Contract Last Net Change High Low Volume ZCU10 423^4 -2^0 424^6 416^2 6476 ZCZ10 438^6 -2^6 440^4 432^0 24859 ZCH11 452^0 -2^4 453^2 445^2 9121 ZCK11 459^2 -2^0 459^2 452^4 1643

Early Opening Calls: off 2-3 cents

Cash Markets

        Bean Barge       Corn Barge        SRW Barge       HRW Track       Ill Riv Frt

Aug +55/60 X +38/42 U +60/?? U +??/?? U 525 Sep +55/60 X +52/54 U +60/?? U +45/55 U 575 Oct +65/70 X +48/50 Z +60/80 Z +70/90 Z 630 Truck Beans Corn Wheat Meal Hi-pro Oil
Chicago -20 X +3 U -55 U
Toledo +10 X -18 U -80 U
Dec ILL +35 X -15 U +17 U -325 U

TREND:

Corn also broke into new highs today. Farmer selling was more active into new highs. A lot of resting sell orders were triggered. Selling out corn length over the last 4 days has proven problematic as the trade has left the closes for 3 days straight. Use a setback to 4.35 to get ownership back.

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