Thursday saw every hat to trade on thrown into the ring. A USDA crop report, outside market influence, weather reports, and weekly export inspections, and the market traded every factor whether bullish or bearish.

When the smoke cleared, grains ended lower as we suggested prior to USDA's report, as funds banked valuable profits made from buying long positions the three prior weeks.

The first hat tossed in the market ring was weather. WXRISK.COM is posting the potential for a heat dome to enter into the weekend and last through February 19, maybe longer, over all of Brazil and Argentina. About 10% of their corn crop is at risk and 50% of the beans could be seriously impacted. This weather event brought strength to grains.

The second hat was the influence of other markets. Crude oil, metals and stocks were all higher bringing spillover buying by funds into the grains.

The third hat was the USDA weekly export sales report out ahead of the opening, showing strong grain exports. Wheat exports last week were 707 thousand metric tons, a marketing year high and, for the second week in a row, a large sale to an unknown destination. Many believe it is China. There's been much talk lately of drought in China's main growing regions. Corn exports were 694 thousand metric tons, with drought-stricken Mexico in for 232 thousand, and a buyer for the 10th consecutive week. China entered for 118. Soybeans saw 603 thousand metric tons sold -- over the 4-week average of 550, as China was in for 338 versus 246 the week prior.

That demand news brought its fair share of buyers in along with the weather and outside market traders. But after corn rose and hit a daily 9-cent high, wheat a 5-cent high and beans a 17-cent high, all fell apart with corn down 5.4 cents, beans of 4.4 cents and wheat 14.6 cents lower on the close.

Hat number four in the ring had the final say. Bullish or bearish funds always sell the monthly report as it takes profits from its monthly rally into the report. That pattern has been consistent for the past four years.

CORN: The crop report was basically in line with the pre-report expectations. Since beans and wheat rallied over 90 cents before going into the report and corn rallied 56 cents, and there was no bullish surprise, funds saw it as a profit-taking opportunity. The USDA put corn ending stocks at 801 million bushels, 45 million from the January report and our lowest ending stocks in 16 years. It's a very bullish number in the big picture, assuring higher prices this growing season. But we were 4 million bushels over the average pre-report estimates. So, it was already priced in. The lower stocks came as the USDA raised export projections to offset lower production in drought-stricken Argentina. Argentina's crop was cut to 22 million metric tons fom 26 last month. Further cuts in production will be feared by funds as Argentine growers' associations see this drought worse than the 2008 drought, which cut production to 15 million metric tons.

SOYBEANS: Bean ending stocks were put at 275 million bushels, unchanged from the month prior and 6 million over the pre-report average guess. They took from Peter to pay Paul on a shell game. They lowered Argentine production by 2.5 million metric tons, and Brazil by 2 million, but lowered U.S. export projections to China.

This further confirms our thoughts since last February when Pres. Obama met with the Chinese premier to work up a new trade agreement which we believe was to restrict or limit their buying so we don't run out. They meet again late month for the new agreement. All eyes and ears will be on deck from the grain industry.

WHEAT: Wheat ending stocks were put at 845 million bushels, 23 million less than the average guess and 25 million below last month. Anything over 800 million bushels is still bearish. They raised world stocks 3 million metric tons, suggesting there's more grain to buy elsewhere. The surprise was that they left Russia and the Ukraine wheat stocks unchanged even though the most conservative estimates sees drought and one of the coldest winters on record , which are expected to cut production 30%. Traders will expect these numbers to fall in future updates. Leaving foreign stocks unchanged was viewed as bearish for wheat on the close as it suggests slower exports.

When the markets open Monday they will say' What Report' and go back to pricing weather in South America and watching outside market influences.

As you know, in my report on Tuesday, I said to expect a selloff on report day unless ending stocks come in under the lowest pre-report trading range estimate we gave you. Even if numbers are bullish the pre-report rally prices it in. The question now is how big a profit-taking break can we expect before new news enters to bring buyers back in. The news to make it happen could be this potential heat dome for South America next week.

Regardless, our goal is to find the low of the last half of February, if it occurs, in order to be a buyer and holder long-term for a March-to-July rally.

Note, read my 2012 yearly grain research report posted on the PFGBEST website for timing on the long-term trend. Unless new bullish news enters, we usually see a 35% to 50% retracement of the recent rally.

Support prices are $6.24 then $6.16 on March corn. March bean support is $12.10 then $11.75 and March wheat support rests at $6.20 then $6.00.

Technical breakouts to the upside occur if we get a close over $6.48 on corn, $12.40 on beans and $6.70 for wheat. For those who are trading elsewhere and would like to use me as your broker to trade our system and open up an account here at PFGBEST, you can e-mail me at or call me at 800-563-9510.

There is a substantial risk of loss in trading futures and options. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report.