USDA Crop Reports Slashes Corn Crop

With the Wednesday, February 9th, mornings’ release of the USDA Monthly Crop report, the grains futures markets all closed higher, primarily on fears that the Corn supply is at a lower than anticipated level.  In even the most basic understanding of economics, low supply equated to higher demand.  Couple that with other reports such as the USDA raising their estimate of corn used for ethanol production by 50 million bushels to 4.95 bb – and you have the perfect storm for Corn Futures to raise by as much as their exchange allows.  Even after some settling, Corn Futures ended trading at a high that hadn’t been attained in over 2 years.

Although corn reports weren’t the only factors involved (weather concerns were some for wheat), the grains markets across the board looked green like this (click on the Ticker symbol to have a chart pop up in a new window):