After a wet, cold spring throughout much of the Corn Belt, the fear of low yields due to planting delays and slow development has pushed grain prices to record levels.

Much of the country's spring wheat, corn and soybeans are several weeks behind in their development and tight supplies make this year's growing season one of the most-watched ever. Added to the market's angst was the loss of more than a million acres of prime farmland in Iowa, Illinois and Indiana to flooding in June, much of which will not be replanted this year.

So, it should come as no surprise that Monday's acreage report from the USDA was closely scrutinized for any surprise or big revisions from March's Prospective Plantings report. March's report detailed what farmers intended to plant. Monday's report revealed what farmers actually planted.

The report showed that farmers planted about 1.3 million acres more corn than they intended in March, no doubt a result of prices that have rallied by nearly $2 in the interim. Soybeans, wheat and cotton all lost acres, probably to corn. Soybeans acres alone came in some 260,000 less than intended.

The reaction in the grain futures markets was severe, as would be expected during an important growing year. As a result of the increase in acres and an unexpected upward revision to inventories, corn prices plunged on Monday, as fears of a shortfall subsided somewhat.

December corn futures, which represent the price on this year's crop, were down the exchange-imposed limit of 30 cents on Monday, with follow-through selling shaving off another 22 cents into Tuesday morning before buyers returned.

Soybeans reacted just as severely, but in the opposite direction. With acreage losses, the soybean supply picture becomes even tighter. Factor in the losses due to flooding and late plantings and traders had a great reason to buy. In fact, traders just didn't stop buying. By the end of Thursday, the November soybean futures price had risen 73 cents on the week, or just under 5 percent.

Traders now will turn their attention to August, when the USDA will release a report detailing specific losses attributable to the June floods. If these losses are significant or even worse than expected, prices could rise even further.

Despite some fundamentally bearish news out of the Middle East this week, the unstoppable energy bull market continued, fueled by fresh worries about oil supplies. On Tuesday, an aide to Ayatollah Khamenei in Iran stated that the most recent proposal from the EU -- which includes steps to freeze Iran's nuclear program in exchange for reductions in sanctions against the country -- was agreeable "in principle." This is a stark reversal coming from Iran, which has rejected and rebuffed nearly every attempt to negotiate the future of the country's nuclear program.

The weakness caused in the oil markets early Wednesday morning was quickly overshadowed by the Department of Energy's weekly inventory report, which showed an unexpected drawdown in crude oil inventories of almost 2 million barrels. The news ignited the pundits and prices soared. After briefly trading under $140 per barrel early Wednesday morning, prices settled at $143.57. The DOE report also showed a large build in inventories of refined products, including gasoline. While this should have tempered the rise in oil prices, the momentum in the crude oil market seems able and willing to overcome any bearish news, as it showed this week.

Opinions expressed solely are those of the writer. Walt Breitinger is vice president of commodities at Wachovia Securities. He can be reached at (219) 738-6460.