December corn was 11 1/4 cents lower overnight. The US dollar was sharply higher overnight taking crude oil lower in later overnight action.

December corn made a new high for the move yesterday and then sold off sharply to close lower on the day. Overnight action was also lower, prompted by a sharply higher dollar, but traders also noted a lack of follow through buying near the recent highs by funds, exporters and end users. The weekly Corn Conditions report showed 64% was rated good/excellent compared to 67% last week and 59% last year. This was a slightly bigger drop than traders expected, but the 10 year average for this time of year is only 58% so the crop is still above normal. Rains have alleviated virtually all of the dryness problem in the Delta and the mid-south, with goods rains also expected to spill over into dry areas of the SE due to the breakup of Tropical Storm Fay. Major growing areas of the western and NW Corn Belt may see some rain tomorrow and Thursday. Additional, needed rains may not hit the rest of the Corn Belt until late next week when they will do less good according to analysts. Weekly export inspections fell back from recent stronger totals on yesterday's report, with only 30.6 million bushels shipped. Farmers continue to be strong holders, and basis levels have remained mostly steady so far this week. Corn prices were higher in India on reports of lower acreage. The USDA attache report from Thailand showed corn production for the 2008/09 season at 4.0 million tonnes, up 4% from the previous year. Funds were noted sellers of near 7,000 contracts yesterday, and open interest fell sharply on the break on Friday.

The market was abuzz yesterday with the idea that rains would hit dry areas of the Midwest later this week and into next week. This morning, the near term rain expectations seem less likely. Tropical storm Fay is breaking up over the southern US and this is bringing heavy rains to parts of the mid-south with some long term drought relief moving into the SE. However, the Midwest was mostly dry over the past 24-36 hours and forecast amounts for the remainder of the week are mostly light in major growing areas. Warmer than normal temperatures are still in the forecast for this week and all the way through next week. Heavier rains and better coverage are now forecast for later next week.