Grain prices took their biggest price decline of 2011 in September, Corn -22%, Soybean -19%, and Wheat -23%. With depressed crop prices, either a short covering rally or a correction would have been the most reasonable scenario in October, but that was not the case this time around.

Corn futures were the only grain that managed to stay positive for the year while their neighboring grains Soybeans and Wheat wiped out all their yearly gains and were trading at 2010 price levels. Grain traders were hesitant to make any major moves in the markets as they were waiting for the USDA supply/demand report which was scheduled for the morning of October 12th. Markets were active on the eve of the report on increased volume in Corn and Soybeans, as traders were either booking profits or positions ahead of the report. Corn was able to settle limit up on October 11th which helped push prices higher for Soybeans and Wheat futures. Once the numbers were released from the USDA, traders took it lightly as volatility dried up and markets were surprisingly stable.

For the reminder of the month, Corn futures traded in a 20 cent range as volume dried up, and traders staying on the sidelines waited for a trend to develop in the markets. Corn futures held a major price resistance at 6.60 per bushel and a major support at 6.20 per bushel. Corn traders would need to see a confirmed price trend before volume can pick up again. December Corn futures ended the month up at 6.47, but are testing yearly lows.

Soybeans futures which are considered one of the most volatile grains in the complex was very calm this month. Soybeans behaved similar to Corn as they rallied before the USDA report, but traded sideways into the end of the month. Soybean futures traded in an 80 cent range for the month of October. Volume on soybeans picked up as traders were rolling out of their November positions and into January contracts. January Soybeans ended the month slightly up from prior month at 12.172, but is still down for the year.

Wheat futures were volatile this month on light volume and spreading against Corn. Wheat traded in a 70 cent range for the entire month. December Wheat settled the month with a gain at 6.2825, but still down for 2011.

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