The corn market traded lower for most of the session, but ended up closing slightly higher on fund buying. The December contract closed up about 1 as it traded in positive territory for about 15 minutes during the day. The corn opened unchanged and traded just slightly lower before trading almost 4 lower and then grinding higher during the session. It was a very quiet day in the grain markets, probably one of the quietest days we have had in a couple of weeks. The rally late in the day was probably fund buying that we have been seeing the last couple of days around the first of the month. There wasn’t any new news out yesterday except for the weekly export sales which remain very strong and support the bulls position that demand is big and going to continue into the future. The market is also continuing to hear below average yield reports, but harvest hasn’t moved into heart of the good areas. This is the same news that has been in the market for a couple of days, so corn seems to be in consolidating right now as it tries to take out the January highs. The volume was light at 211,000 contracts and funds were buyers of about 4,000 contracts.

Overnight, the corn market was higher before sold off in the last 30 minutes to closes slightly lower. The soybeans and wheat were higher, but corn closed slightly lower as it made new highs overnight at $4.49, but couldn’t get up through the January highs and found some small selling at the end of the session. There isn’t any new news out this morning as the market tries to gain strength against harvest and a lot of bullish news already in the market. The USDA will release their September crop report a week from today and the market is expecting to see a decrease in yields. The extent of the decrease is up for debate and even if they don’t make a major adjustment lower, the market may not believe it. Informa will be releasing their September estimate today around 10:30 am which could move the markets if there is a big surprise. The corn market will be called unchanged to slightly higher this morning as the outside markets are stronger than when the grains closed earlier this morning. We have a 3 day weekend this weekend, so you could see some profit taking today and expect there to be light volume as many traders are not in today or will be leaving early.

Globex Overnight Contract Last Net Change High Low Volume ZCU10 431^2 -1^6 434^0 431^0 3761 ZCZ10 446^0 -1^4 449^0 445^4 11351 ZCH11 459^0 -1^6 462^2 459^0 2212 ZCK11 465^4 -1^6 468^4 465^4 536

Early Opening Calls: off 1-2 cents Top News -- Head of COFCO says animal feed production could go over 150 mln mt vs. 148 mln last year. He said increasing meat consumption could put feed production over 250 mln mt in just 10 yrs time -- Head of Chinese ag consultancy, JCI, sees China's Corn imports next year rising to 5 mln mt as this season's harvest falls short. -- Head of Chinese ag consultancy, JCI, sees China's Corn crop at 158.7 mln mt better than the firm's initial estimate of 149 mln mt, but that's lower than the gov't forecast by 9 mln mt. -- Informa will release their production estimates this morning, analysts believe they'll likely lower production outlook and yields -- German Ag Ministry offered their grain production estimate for this season, they sees output at 43.8 mln mt down 12% from the year ago period. They noted summer heat wave in growth period and heavy rains at harvest hampered yields. -- Germany's winter barley crop was expected 14% lower at 8.66 mln mt, while the spring crop is seen down 20%, all types of wheat production is seen down 5% to 23.9 mln mt while hard winter wheat is seen at 23.6 mln -- Japanese Ag Ministry announced a Sept 10 bid deadline for 250,000 mt of feed grade Barley in a SBS tender. Shipment is expected by Dec 31 -- 20,000 mt of food grade Barley was purchased by Japan's Ag Ministry under SBS tender rules, they had originally tender for 20,000 mt; shipment is expected by end of November -- US 2010 Corn crop was estimated at 13.147 mln bu with yield of 162.3 bu/ac, acc. to survey by Allendale. USDA estimates are 13.365 bln bu. and 165.0 bu/ac -- US 2010 Soybean crop was estimated at 3.370 bln bu with yield of 43.2 bu/ac, acc. to survey by Allendale. USDA estimates are 3.43 bln bu. and 44.0 bu/ac -- An economist at the UN food agency says Russia's decision to stop exports won't move worldwide markets to the food crisis of 2007/08. Yet the UN announced emergency meeting for Sept 22 regarding volatile grain prices yesterday. -- SEPTEMBER 2010 CORN FUTURES 9/2/10 : 877 contracts -- SEPTEMBER 2010 ETHANOL FUTURES 9/2/10 : 0 contracts -- Pending Tender: Traders say Libya is looking to tender for 30,000 mt of Corn in a Thursday, Sept 2 bid deadline -- Pending Tender: Traders say in the week of Aug 30 to Sep 3 they expect S Korea's MFG to issue a tender for 40-60,000 mt of Corn. Shipment of the grain is reportedly for the Nov-Dec period -- Pending Tender: 20,000 mt opt origin feed grade Barley tender floated on Thursday by UAE with a bid deadline of Sept 6th. Shipment of the grain is for LH Sept to FH Oct -- Pending Tender: Merchandisers in the EU say Jordan's state run grain buyer is seeking 50,000 mt of feed grade Barely in an August 24 tender deadline. Delivery is for FH Sep or FH Oct -- Dalian May Corn futures were down -3 @ 2,016 yuan. mt -- Liffe Nov. Corn futures were up +.50 @ 196.00 euros/mt. -- Globex Corn Vol: 185,683; Pit Vol: 18,411; Open Interest change: + 2,700 -- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Below Precip. -- Outside markets: Energy Complex +0.32 at $75.34; Gold & Silver: -10.5 at $1242.7 & -0.067 at $19.605; US $ -0.151 at $82.350

Cash Markets -- CIF Corn steady. Sept. +30Z to +33, LH Sept. +41 to +45, Oct. +48 to +51, Nov. +54 to +56, Dec. +56 to +58, Jan. +50 to +52

TREND:

Corn has methodically walked higher. Move support up to 4.35 to 4.30. We should see an immediate move to around 4.50 to 4.60 where will could slow down and try to see what has happened to the uncovered user and the farmer seller?

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