December corn was 9 1/4 cents lower overnight. The US dollar was mixed to higher during overnight trade and crude oil was mixed to lower.

A sharply higher corn market fell short of last week's highs before easing somewhat into the close. This was followed by further weakness overnight. Funds were fairly heavy buyers yesterday of at least 5000 contracts. Weather has again entered the picture with dry conditions causing some minor concerns about the potential for a slight drop in overall yield from the USDA's current estimate of 155 bushels per acre. However, the weekly Crop Conditions report showed 67% of the overall crop rated good/excellent compared to 67% last week and 58% last year. The 10 year average for this time of year is 59%. Ohio and Illinois conditions fell while Iowa conditions improved. As another example of the lateness of the crop, the percentage of the corn crop which has entered the dough stage reached just 49% as compared with 77% last year. Iowa was 30% against 67% last year and Minnesota was 20% as compared with 69% last year. Rains are expected in many major growing areas over a 3-day period starting on Friday. Feed demand remains strong on export markets with South Korea reentering the corn market over the past week or so.

Dry conditions are starting to be a concern in the Midwest. A vast stretch that includes virtually all major growing areas east of the Mississippi along with SW Iowa and the eastern and western thirds of Missouri have received 1/4 inch of rain or less over the past 7-10 days with further dryness predicted over the next 2-3 days or longer. Much of this area has actually received less than 1/10 inch over that stretch. While this will not ruin the crops, it can push the corn yield back below the trend line at 154.9 bushels per acre and could reduce yield for the late planted beans as well. Nebraska has received ample rains over this period and Minnesota is said to be in better shape than other major growing areas despite receiving only light to scattered moderate rains over the past two weeks. The next rain in the Midwest looks to be on Friday in the central and north central Corn Belt with somewhat more general coverage moving from NW to SE over the weekend. The USDA reported a sale of 155,465 tonnes of corn to Mexico yesterday. South Korean feed groups have purchased 100,000 tonnes of corn and one group may be in for 110,000 after passing on a tender for 220,000 tonnes late last week.