The corn market was very strong on Friday eventually closing near the highs up about 17 cents. The corn market started quiet enough trading slightly unchanged before moving higher up against the $4.50 area which was the January highs. There was a lot offered on the screen at that price and when it eventually traded through, there was buy stops and corn quickly ran to about 10 cents higher. It settled back, but then there was a much stronger rally that took corn almost 20 cents higher before trading in a 3-4 cent range at the upper end of the days range. Traders/analysts noted heavy farmer selling throughout the day, but that seemed to be dwarfed by fund buying that kept the market strong. The catalyst for the strong corn market was private forecaster Informa which released their September estimate at 164.1, but they said they believe the final yield will be 158.5. This put a shock in the market especially since all they released formally was the first number and only clients of Informa got the second number which was why there was a delay in prices going higher. We have been hearing stories about lower yields, but the bears kept saying wait until we get into the good areas and it will make up the difference, so Informa’s estimate seemed to turn the market. The weather this summer was highly variable and even the areas that were hot, but got plenty of rain aren’t producing big yields. In the next couple of weeks, harvest will move into what is considered the garden spot this summer, but they will need to average 20+ bushels better than average to make up the difference. The volume was huge at 563,000 contracts and funds were buyers of over 30,000+ contracts.

Overnight, the corn market opened slightly lower, then traded higher up almost 5 cents before selling off and closing down over 5 cents about 10 cents off the highs and a couple of cents off the lows. There wasn’t any real news over the long weekend, but the weaker outside markets and higher US$ helped put pressure on corn as it tried to rally and actually made new highs before finding profit taking. We will continue to get yield reports this week as harvest moves north into some of the better areas. The key will be if we start getting reports of better than average yields to help bring up the bad yields from the southern part of the Midwest. The corn market has put in a pretty good top with the night trade, so it will be interesting to see if corn can go after those highs. We get the crop progress this afternoon after the close, but many in the markets aren’t paying attention to these anymore because they feel these aren’t reflective of the yields. These ratings have stayed very high, but the yields aren’t representative of the higher yields. We will probably see more volatile this week as traders position themselves for USDA report on Friday morning before the opening. As one trader said, it will be hard to get a very bullish report from the USDA after the market is already trading lower yield number. Historically, the USDA makes few changes in the September report, so a big reduction in yield could be interpreted the USDA will be making major changes. The corn market will be called to open 3-5 lower and so the key will be if it finds buying and closes higher with a lower opening.

Globex Overnight Contract Last Net Change High Low Volume ZCU10 444^2 -5^4 459^0 443^2 4680 ZCZ10 459^2 -5^2 469^0 456^6 32192 ZCH11 473^0 -4^6 481^4 470^0 9387 ZCK11 478^0 -4^4 485^2 475^4 3064

Early Opening Calls: off 3-5 cents

Top News -- USDA's weekly Monday export inspections data will be released at 10:00 AM CDT on Tuesday, Sept 7 due to Monday's holiday -- USDA will release their usual Monday afternoon crop progress report on Tuesday, Sept 7, at 3:00 PM CDT due to Monday's holiday -- On Monday 100,000 mt of Barley was tendered for by Jordan's trade ministry, the bid deadline is Sept 23rd. The grain is expected for delivery in November to December 2010 -- French Farm Ministry raised their estimate for 2010 Corn production was raised to 13.6 mln mt vs. 13.5 mln mt in the prior report -- China's weather bureau on Tuesday said the northeastern Jilian province could experience sharp temperature drop limiting the grain fill ahead of harvest, but expects temperatures to rebound by Thursday this week -- China Grain & Oilseed center estimated 185,175 mt or 19% of the Corn reserves offered from gov't stockpiles were sold on Tuesday -- Private Ukrainian crop forecaster pegs 2010 grain harvest at 39.7 mln mt down 700,000 mt from their previous forecast. The country's corn crop is expected to fall to 11.0 mln mt down 0.7 mln mt from the prior estimate -- Ukrainian grain industry group says ongoing "quality" checks by customs agency is halting the shipment of 380,000 mt of grain on more than 20 ships in Ukraine ports. The industry group is displeased because they say firms are not able to take advantage of high prices on the world market. -- Private crop forecaster estimates Ukraine 10/11 Corn exports at 6.7 mln mt, down 600,000 mt from their prior estimate. -- Private crop forecaster estimates Ukraine 10/11 Barley exports at 3.8 mln mt, down 1.2 mln mt from their prior estimate. -- Russia’s President told producers in the drought stricken areas of the country that the ban on grain exports may be lifted earlier than December 31. He also said sate grain stocks may be insufficient to cover the country’s needs and they may need to look for grain. -- USDA will release their usual Thursday morning export sales report on Friday, Sept 10, at 7:30 PM CDT due to Monday's holiday -- USDA monthly crop report also will be released on Friday, Sept. 10 at 7:30 AM CDT -- On Wednesday, Sept 8 Stats Canada will release their grain & oilseed stockpiles data for the period ending July 31, 2010. -- Stats Canada: Analysts see Wednesday's Stats Canada July 31, 2010 Barley stocks figure around 2.3 mln mt, that compares to last July 31, 2009 stocks figure of 2.84 mln mt -- Stats Canada: Traders expect Wednesday's Stats Canada July 31, 2010 All Wheat stocks figure around 6.9 mln mt, that compares to last July 31, 2009 stocks figure of 6.547 mln mt -- Stats Canada: Traders expect Wednesday's Stats Canada July 31, 2010 Durum Wheat stocks figure around 2.8 mln mt, that compares to last July 31, 2009 stocks figure of 1.90 mln mt -- Stats Canada: Analysts see Wednesday's Stats Canada July 31, 2010 Canola stocks figure around 1.20 mln mt, that compares to last July 31, 2009 stocks figure of 1.66 mln mt -- Pending Tender: Traders say Libya is looking to tender for 30,000 mt of Corn in a Thursday, Sept 2 bid deadline -- 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: 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 -- Dalian May Corn futures were up +1 @ 2,037 yuan/mt. -- Liffe Nov. Corn futures were down -.50 overnight @ 197.25 euros/mt. -- Globex Corn Vol: 520,493; Pit Vol: 26,863; Open Interest change: + 33,564 -- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above Precip. -- Outside markets: Energy Complex -1.33 at $73.27; Gold & Silver: +8.7 at $1259.8 & +0.051 at $20.000; US $ +0.520 at $82.590

Cash Markets -- CIF Corn steady off 3. Sept. +28 to +30, LH Sept. +38 to +42, Oct. +48 to +50, Nov. +53 to +56, Dec. +56 to +58, Jan. +49 to +52

TREND:

The Dec corn chart first upside count was 4.60 and the market could wait out a correction here. However, this contract seems to have a head of steam building that could take it directly to the second count near 4.99. This would also coincide with the resistant on the long term chart at 4.90 to 5.00. New highs on the long term chart this week could also develop more technical strength.

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