GOOD MORNING—

MARKET HIGHLIGHTS

• Markets trading higher overnight in a quiet trade.
• Early yields continue to show better than expected corn yields in IL with soybean yields solid as well.
• Crop progress yesterday had corn ratings steady and soybean ratings down 1%.
• End user buying interest continues to show up on pullbacks with South Korea tendering overnight.
• GASC tendered for wheat yesterday, but sellers are losing interest after their most recent rejection due to poppy seeds.
• Reuters running a story about Chinese corn farmers holding grain off the market.
• Corn technically remains in a downtrend, failing at 20 DMA resistance again yesterday.  Support for Dec. is at 3.50 and resistance 3.54 ½.
• Soybeans technically remain stuck in their range with major overhead resistance at 9.80 proving to be a tough level to get through.  Support at 9.60 and resistance 9.70.
• Wheat technically looks like a low was put in during August with support where Sep. expired near 4.30 and resistance at 4.50.

WEATHER

• Rains expected to hit the WCB over the next week and a half to slow the start to harvest there.
• The ECB is dry for the next two weeks, which combined with warm temperatures should allow harvest to ramp up.
• Rains expected to help dry spots in Australia later this week.
• Brazil expected to catch needed rains in the 6-10.
• Overall, nothing new of significance.

OUTLOOK

• Nothing too earth-shattering in the market this morning.  Corn continues to see carries build and early harvest reports are supporting the USDA’s yield numbers.  I think there is potential for higher prices longer term, but I think we are still in the process of putting in a harvest low.  The gap that was left on a continuation chart when Sep. expired needs to fill before I will believe a low has been made.
• Soybeans continue to outperform the corn market, but early bean yields have been pretty good too.  9.80 is proving to be a tough level to get through, and harvest pressure is likely to pick up in the coming weeks.  Demand is incredible, but I am skeptical that we can mount much of a rally in the middle of harvest.
• Wheat pulled back yesterday and is likely to struggle unless the selling pressure in corn eases.