As you can see in the table below, September was unkind to grains, as most saw declines of around -20% as they face the prospect of cooling demand. Yesterday was the exact opposite, however, with grains rising 5% to 8% on average. Of course, as it always happens, the minute we started taking a look at whether this is the start of a trend reversal, or just a violent bear market rally – grains decided to reverse course again rather heavily today.

[Disclaimer: Past performance is not necessarily indicative of future results.]

What’s with all the theatrics? Well, grains were reacting to the overall risk on/risk off trade in September- and yesterday to a certain extent. But there is more going on than just this, with reports of China purchasing a hefty amount of corn and soybeans supposedly behind the move higher yesterday, and prices today reportedly falling as the USDA projected higher supplies, lower exports and lower feed consumption.

The million dollar question for most grain traders is “What are we feeding animals?” Corn feeding was left unchanged, and wheat feeding is down, despite what the country tells us is the biggest summer wheat feeding season that they’ve had in years. The USDA tells us that we grew less wheat, and are going to feed and export less, leading to 76 million more ending stocks than the September estimate.

Grains are no stranger to suspect supply and demand metrics, but, in our experience, the only real way to know the actual numbers is to wait and see. In the meantime, the question we’re asking in managed futures is- will the down trend hold.