Corn prices have settled into a relatively narrow trading range, with December 2009 futures trading between $3.20 and $3.50 per bushel over the past three weeks.

According to University of Illinois Extension Economist Darrel Good, the relatively low price level reflects the anticipation of a large harvest in 2009. The USDA will release the first survey-based corn-yield projection on Aug. 12. This survey will also be used to update estimates of planted acreage of corn and acreage expected to be harvested for grain in 2009.

"The update of the acreage estimate is motivated by late planting in some states and the possibility that acreage deviated from June intentions," Good says.

Market consensus seems to favor a modest reduction in acreage compared to June intentions.

"Since acreage estimates for soybeans are also updated in August, the report will give some insight into the magnitude of unplanted acreage. Observation suggests that several thousand acres were not planted this spring, but this report will reveal if the total is large enough to alter production expectations of corn or soybeans," Good adds.

The USDA will also update projections of corn consumption for the current and upcoming marketing years.

 "The USDA's July Cattle on Feed report indicated that the inventory of cattle in feedlots with capacity of 1,000 head or more was 5.3% smaller on July 1, 2009 than on July 1, 2008," Good explains. "The July Cattle report also confirmed some liquidation of both the beef cow and dairy cow inventories, and a 2009 calf crop that is expected to be 1.4% smaller than the 2008 calf crop. These smaller numbers all point to some weakness in feed demand for corn for the remainder of the current marketing year and into the 2009-10 marketing year."

On the other hand, U.S. corn exports have been relatively large in recent weeks. Export inspections for the week ended July 23 were reported at an unexpectedly large 52.234 million bushels. Census Bureau export estimates through May were about 50 million bushels larger than the cumulative export inspection estimate.

"If that margin has persisted, exports during the final 5.6 weeks of the 2008-09 marketing year need to average 36 million bushels per week to reach the USDA projection of 1.8 billion bushels," Good adds.

He says it is generally expected that the August USDA reports will continue to point towards an ample supply of corn for the 2009-10 marketing year.