Trading activity in the grain complex has been light and erratic the first few days of the month as the markets were closed in observation of Labor Day and the pending USDA Crop Production and Supply & Demand report which was scheduled for release Monday September 12th.

During the last week of August Wheat futures were able to trade above their major price ceiling of 8.00 per bushel on two occasions, but were unable to settle above those prices. Buyers booked profits and Wheat prices drifted lower for two weeks straight. The down trend was confirmed Wednesday afternoon when Wheat formed an outside day and closed on the down side indicating a bearish trend. Wheat prices fell throughout the week into Friday and also into the USDA report.

Corn futures traded at contract highs during the last week of August, but were unable to keep those high levels into September. End of month profit taking pressured Corn prices into the new month. During Friday’s trading session, inter commodity spreading was seen between Corn/Wheat. Those two grains were briefly trading at the same price until spreaders pushed Wheat lower and Corn higher. Historically, Wheat has traded at a premium to Corn but with the recent global demand for the yellow crop, Corn prices have outpaced Wheat. Bull spreading (Corn/Wheat) continued to widen after the USDA numbers were out.

Soybean futures traded in a tight twenty cent range throughout the week with little volume. The USDA Crop Production numbers are as follows: Corn production down 3% from August forecast as 12.5 billion bushels. If realized, this will be the third largest production total on record for the U.S. Based on condition as of September 1st, yields are expected to average 148.1 bushels per acre, down 4.9 bushels from the August 1st forecast and down 4.7 bushels from 2010. If these numbers are realized, it will be the lowest average yield in the U.S. since 2005.

Soybean production up 1% with a forecast at 3.0 billion bushels, up 1% from August but down 7% from last year. Based on September 1st conditions, yields are expected to average 41.8 bushels per acre, up .4 bushels from last month but down 1.7 bushels from last year. The season average farm price for all wheat is projected at $7.35 to $8.35 per bushel, up from last month’s range of $7.00 to $8.20 per bushel which is supported by higher corn prices.

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