December corn was 5 1/4 cents higher overnight. The US dollar was lower overnight and crude oil was higher.

Pressure in corn yesterday came from the sharply higher dollar. Support today may be coming primarily from a lower dollar. Weather is certainly a factor as well with dryness persisting across a broad section of the Midwest stretching from Minnesota through most of Iowa, all of Wisconsin, northern and eastern Illinois and all of Indiana and Ohio. Moderate rains have fallen in southern Ohio overnight, and more are expected in Minnesota and parts of Iowa and Wisconsin today and tomorrow. Corn is less affected by the dryness than soybeans at this point with corn probably in a position to lose 1 1/2 to 3 bushels per acre from the latest USDA estimate of 155 bushels per acre if the dryness persists. While this is less on a percentage basis than the potential loss in soybeans, it could nonetheless result in loss of nearly 250 million bushels in 2008/09 production. Basis levels were steady to firm at the Gulf yesterday amid tight supplies. The upper Mississippi River was restricted to one-way traffic at two locations above St. Louis yesterday to allow dredging. A segment of the Illinois River was also closed for dredging although the restricted movement may last longer on the Illinois River. A survey from Farm Futures Magazine indicated that producer's early intentions for 2009 planted area are about unchanged from this year. If so, and demand inches higher, the outlook for tightness next year could be a factor to support December 2009 corn.

The Midwest was as dry as a bone in most areas over the past 24-36 hours with the remains of Tropical Storm Fay chugging slowly eastward and staying mostly south of the Ohio River until late overnight when moderate rains pushed into southern Ohio. Dryness is, therefore, still the main news in the Midwest, and to illustrate the point Chicago is experiencing its driest August in 45 years. Showers are expected in Minnesota and parts of Iowa today with Minnesota and Wisconsin getting more rain tomorrow. On Friday, this system is expected to push into central and eastern growing areas. Amounts are expected to be light to moderate. Temperatures are forecast to be slightly above normal into early September.