The quarterly USDA report left Corn futures locked limit down on Friday October 1st, causing the rest of the grain complex to close lower as well. The limit down close on Corn was expected to spill over into Monday morning’s trade. Offers were still waiting to get lifted from Friday, thus Corn opened gap down.

After the initial gap down open in the Corn, buyers stepped in to close in the gap, lifting prices into the positive territory. With the big sell off in Corn futures, and the negative USDA quarterly report, one would think the down trend would resume, but it was quite the contrary over the next couple days. Corn managed to rally higher trading at prices pre USDA report, while Soybean and Wheat traded in a tight range bound erratic direction. Speculators, hedgers, funds, and brokers were awaiting the big USDA crop production report which was scheduled to be released Friday morning 8:30 CST. The USDA numbers came in extremely bullish negating the prior week’s USDA report. Corn production’s forecast was 4% lower than September’s report, while Soybeans were adjusted 2% lower from a month ago. Corn yields are pegged at 155.8 bushels per acre, down 6.7 bushels from last month, and 8.9 bushels below the 2009 crop. Soybeans are expected to average 44.4 bushels per acre, down slightly from last month and a bit from a year ago.

These bullish numbers sent pre market bids at the daily imposed limits. When the opening bell sounded, it wasn’t looking good for the shorts in the market as all grains in the complex opened limit up. Corn and Soybeans locked up limit, and Wheat briefly came off their limits, only to settle back up to the limit. Since grains settled limit up, the exchange imposes an expandable limit to where Corn’s limit will be 45 cents, Soybeans $1.05 , and wheat 90 cents. If the limit settlement continues, limits will get lifted once again, if not, then they will revert back to their normal daily limits. Corn ended the week at a new yearly high putting it at their highest levels since 2008. Soybeans also were able to close at a new yearly high. Although Wheat wasn’t able to close at new yearly highs, they are still up for 2010.

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