The August monthly USDA crop production report came and went Thursday with no shocking surprises, but a few twists. 

Corn yields were dropped to 153 bushels per acre from 158.7 last month due to the fourth hottest July on record, while corn was in it's key pollination stage. This dropped projected production to 12.914. The report put our 2012 ending stocks at 714 m.b. 156 m.b. lower than last month and the lowest stocks to use ratio in 51 years. World ending stocks dropped to 114.5 3 million metric tons a five-year low. But all this was in-line with pre-report range guesses. 

The market sees numbers on the next report adjusted lower again, as this report was a typical conservative estimate by the USDA. This report cut feed usage 150 million bushels, even as historic drought in the western Plains cut range feed and force huge numbers of cattle into feed yards to fatten up on corn. 

They (USDA) cut  ethanol usage, yet ethanol producers are paying eight dollars per bushel for corn not just because of usage here but soaring demand for US ethanol to Brazil. Brazil sugar crop was down 30% this year and its sugar that they use for ethanol production there. The trade  believes the USDA is off on its usage of corn for feed and ethanol demand and this will show up on the September 12 USDA crop Report. 

The bean  production came in at 3.056 b.b., down from 3.225 last month with 2012 ending stocks at 155 m.b. versus the July report of 175 m.b. USDA cut yields and planted acreage to get the total. With half the crop yet to reach to the pod-setting stage, weather looks to be the keys pricing ingredient into month-end. Bean yields, whether they get better or worse still lies ahead. Focus on the next weather report. The wheat report was a yawner. Ending stocks came in at 671 m.b. 1 m.b. from last month. All-wheat production was down 21 m.b. from July and world wheat stocks up 6 million metric tons, yet wheat has done surprisingly well. 

There's an undercurrent of talk that the worst drought in history, in the Southwest winter wheat states of Texas and Oklahoma, has farmers saying they will not plant this year's crop beginning in September unless weather patterns change. Even insurance companies are not going to offer crop insurance unless the overall weather pattern changes back to normal. 

The US is the world's largest US winter wheat producer exporter in the world. So, this may be a huge issue in September's planting season. We start the week with rain in the Midwest. Coverage is good, totals small. The crop report should see corn put another $.20-$.28 on prices to fully factor in the report. But, traders will continue to look at outside markets for daily direction. A close over 7.22 basis December corn futures sets up 7.40, as next stop. Support is 7.04 then 6.92. November beans support lies at 13.05 with resistance at 13.75 then 14.10. December wheat support is 7.00 with resistance 7.50 then 7.60. A close over 7.60 would give us a breakout to the upside.