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NEAR-TERM MARKET FUNDAMENTALS: The news overnight was dominated by China’s announcement that they would begin to sell 2.0 million tonnes from their strategic reserve of corn starting Tuesday of next week. China has accumulated 40 million tonnes of corn as compared with production last year near 165.5 million tonnes. In a similar story, Thailand has announced that it plans to sell all of the 1.0 million tonnes in its strategic corn reserve over the next two months. Traders report that outside markets may have also added some light selling pressure early in the overnight session. However, they note that the corn market may not be following outside markets very closely this week. Yesterday the corn and soybean markets broke sharply from early highs on heavy selling by funds despite big rallies in crude oil and equities and a sharp drop in the dollar. US crop weather remains mostly favorable with cool temperatures the main story this week. Another cool front is expected to start pushing into the NW Midwest starting today with this expanding to the south into the weekend. Cool temperatures are considered a plus for corn yields, and the combination of adequate to excellent moisture in most areas and cooler than normal temperatures in parts of the Midwest is causing many traders and analysts to look for an increase in the USDA’s yield estimate in August. The national yield is now projected at 153.4 bushels per acre, and some feel that this leaves considerable room for an upward revision. Many traders have pushed yield estimates to near 157-158 bu/acre. Farmer selling remained light to moderate into mid week. Traders are looking for another strong figure on this morning’s Export Sales Report, although probably below last week’s combined old and new crop total of 1.165 million tonnes.

WEATHER: The storm pattern that moved across parts of the northern and south central Midwest yesterday is shifting to the south today. This may bring some needed rain to the western and central Delta by tomorrow with some additional rains there by Sunday. Dry, sunny weather is expected prevail in most of the Midwest through the weekend with showers moving into the western Midwest during the first half of next week. The very hot air system that has dominated the southern Plains is expanding and shifting to the west as predicted.

TODAY’S GUIDANCE: The December corn contract appeared to have enough steam to push up through the December 2008 low at 349 1/4 yesterday, but it stopped on a dime at that resistance level and moved sharply lower. This came on fund selling. Weather is the main fundamental reason for the break as there is a growing awareness that cool temperatures during mid summer can bring big yields, especially since most of the Corn Belt is adequately watered at this point. First support comes in near 331 to 328 today in the December contract and then near 320. Resistance is at 345.

This content originated from – The Hightower Report.