After a month of selling in the grain complex, the markets had consolidated and traded sideways as traders were waiting for the USDA to release the crop production and supply/demand numbers on October 12th. Trading tends to get erratic a couple days before the USDA announces their numbers.

Tuesday was a different case, in which all grains; Corn, Soybeans, and Wheat opened the morning weaker ,but quickly turned within the first thirty minutes. Volume started to pick up substantially as the market started to break weekly resistance levels. Soybeans had been trading steadily around 11.60 per bushel for a week, which attracted bottom pickers to lift the markets. Wheat futures behaved the same, as buyers saw an opportunity to buy low and sell high. When corn was unable to stay below 6.00 per bushel, sellers ran for cover as buyers kept buying anytime there was a minor dip in the market. All grains rose sharply with Corn settling limit up at their new price limit of 40 cents per bushel. Wheat futures were the strongest gainer as they closed up 8+% Tuesday afternoon.

Wednesday morning, before the grain pits opened at the CME Group, the USDA released their anticipated numbers. Wheat’s ending stock for 2011/2012 is raised 76 million bushels, as lower expected domestic use and export more than offset reduced production. Production is lowered 69 million bushels, mostly reflecting a lower spring Wheat output as estimated in the September 30th Small Grains report. Corn production down 1% or 12.4 billion bushels from prior month forecast and down slightly from the 2010 production estimated. If the forecast is realized, this would be the fourth largest production total on record for the US. Based on condition as of October 1st, yields are expected to average 148.1 bushels per acre, unchanged from the September forecast, but down 4.7 bushels from 2010. If realized, this will be the lowest average yield since 2005.

Soybean production down 1% or 3.06 billion bushels from last month’s forecast and down 8% from last year. Based on October 1st conditions, yields are expected to average 41.5 bushels per acre, down .3 bushel from last month and down 2 bushels from last year. If realized, the average yield will be the second lowest since 2003. The negative numbers on Wheat sent prices tumbling for the rest of the week. December Wheat closed up from last week, but still trades at the lowest levels for 2011. Corn and Soybeans took the bullish report lightly and continued to advance into Friday’s closing bell. December Corn ended the week on a positive note and up for the current month. November Soybeans posted a strong rally and closed the week at the highest levels in three weeks. For more information about the USDA, please visit www.usda.gov

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