Traders have been patiently waiting on the sidelines for the past couple days as the USDA grain stocks number was due Thursday morning. Corn had a modest gain in prices backed by demand from China last week, but retreated as the traders "bought the rumor, and sold the news."

Soybeans and Wheat traded in sideways action for a week coming into the USDA report. Thursday morning, traders were caught off guard as federal officials said inventories declined more than expected. This news sent Corn futures to open limit up to 6.9325 a bushel. Traders used Corn options to price the future contracts as they stayed limit up the entire trading session. MAY Corn option contracts were synthetically trading around 7.32 a bushel in the option pits. Synthetic prices are the implied price of futures based on options relationships. This USDA report puts Corn at the high price levels seen in 2008 during the food crisis in the Middle East.

The United Nations world food price index is at record highs as commodity prices across the board are at multi year highs. Corn prices have nearly doubled since the summer of 2010 on increased demand. Soybeans and Wheat futures also rallied on the back of Corn. Prices in Soybeans and Wheat declined into the last trading day of the week on profit taking and an over extended rally. Corn hit their expanded daily limit bid on Friday, but came off the highs slightly into the close. Corn futures settled at their highest levels in the past two years.

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