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NEAR-TERM MARKET FUNDAMENTALS: Evening up ahead of today’s USDA supply/demand report has been the main feature in the corn market since mid week according to traders. Weather and outside markets have also been factors in recent price action. Weather forecasts may have actually improved in the north central and NE Corn Belt with increased rain expected in Minnesota and Wisconsin. The major area of concern is the Delta, possibly reaching as far north as southern Missouri where hot temperatures are forecast through the next 10 days along with intermittent-to-light rain. China is concerned about a likely drop in corn production this year following floods and cool temperatures in the NE. This may break a 5-year string of progressively higher grain crops in that country. The USDA reported a sale of 110,000 tonnes of corn to South Korea. This week’s export sales were strong in corn with the total to-date now standing above the USDA’s forecast for the 2008/09 crop year. That could result in an upward revision in the old crop export total on today’s supply/demand report. Net weekly export sales of corn were 749,200 tonnes for the current marketing year and 415,400 for next year for a total of 1,164,600. As of July 2, cumulative corn sales stand at 101.2% of the USDA forecast for 2008/2009 versus a 5 year average of 96.3%. Deliveries against the July contract today were zero with the total for the month to-date also at zero. Next Tuesday is the last trading day for July futures.

WEATHER: Forecasts continue to call for 90 degree temperatures in the Delta, the southern Plains and the SW and south central Midwest. Severe heat is situated in the extreme southern Plains. Rain is expected in Nebraska and parts of Kansas today as well as Iowa, southern Wisconsin and eastern Illinois. Moderate temperatures and scattered rains are expected in most corn and soybean growing areas through much of next week with the exception of the Delta which is expected to remain hot. The 6-10 day calls for normal to below normal temperatures for most of the Midwest and northern Plains. The southern Plains and the Delta are expected to remain above normal. The 6-10 day calls for precipitation to be normal to above normal in the Midwest and in the central and northern Plains. Areas to the south are looking for below normal rainfall.

TODAY’S GUIDANCE: Overnight firmness in the face of a substantially higher dollar suggests that the corn market is still leaning to the oversold side. Of course, all of that could be negated by negative numbers on this morning’s supply/demand report, but there does not seem to be much room for a bearish surprise. Traders are well aware that crop weather has been very favorable since the June report and the extra 90 million bushels seen on the quarterly stocks report have already been discounted by the market. That leaves strong export sales to possibly give us a boost on the demand numbers for 2008/09. First support today remains at 335 and again at 315 down to 302. Resistance remains at 349 1/4 then at 375 1/2.

This content originated from – The Hightower Report.