Corn prices hit an all-time high following the release of the USDA's much anticipated June WASDE report yesterday. Revisions made in the USDA report were very supportive for corn prices – a 1.5mn decline in US corn-planted area (from 92.2mn acres to 90.7mn acres) while the harvested area was estimated at almost 2mn acres lower; US 2011-12 ending stocks were lowered to 695mn bushels, taking them below 2010-11's low levels while a significant upward revision of 12mn tonnes was made to China's corn demand which the USDA noted would be met by drawing down domestic stocks.

All this paints a very supportive backdrop for corn prices and with balances tightening further, upside risks from current elevated levels remains. The USDA kept its estimate of the US corn yield unchanged from May's report – at 158.7 bushels/acre – and, this could provide the next bullish impetus to prices. Global corn stocks to use ratios are estimated at record lows.

The report was less positive for wheat and soybeans. While EU wheat production was revised down after a dry spring, global production remains comfortable while estimates of US Hard Red Winter Wheat came in above market expectations. Soybean planted area in the US was unchanged while 2010-11 US ending stocks were revised higher; 2011-12 US exports were lowered and ending stocks revised higher while Southern Hemisphere production was also upwardly revised.

Price action across the grains will be driven by corn over coming months where market balances are very tight. High corn prices bode well for wheat feed demand especially as there is no shortage in feed grade varieties. For soybeans, US plantings and harvested area could change over coming months with a longer planting window than corn.