Two mega trends are converging on the grain markets. One has been poor growing weather, and the other is increased demand for food throughout the developing world. The combination of these two factors are driving grain prices higher and higher.

On Wednesday, the United Nations' Food and Agriculture Organization (FAO) issued a notice that severe drought in China's main winter wheat region could pose a serious threat to output, as reported in the Wall Street Journal. Some 5.2 million hectares out of the total of about 14 million hectares could be under threat from poor rainfall and low snow cover.

With about twenty minutes to go before the end of the trading day, I see a quote of $31.18 for Kraft Foods (KFT). That meant that the stock was basically flat, down a mere penny to be exact.

Boring. I actually used that word to describe this stock back in August. What else do you call a stock that has traded in such a narrow 52-week range? Currently, the low for the year is set at $27.09 while the high is $32.67.

Moments ago, food firm Yum! Brands (YUM) reaffirmed its 2010 earnings per share (EPS) growth forecast. Ahead of its annual investor meeting, the group restated expectations for EPS growth of 14%, less special items. In addition, YUM believes it will deliver 2011 EPS growth of 10%, excluding special items. These numbers are bolstered by the company's strength in China. CEO David Novak stated, "2010 has been a strong year led by our China business, and I'm pleased to report we remain on track to deliver 14% EPS growth."

The J.M. Smucker Company (SJM) was down almost 1.4% to $62.15 at the close of the day. Volume was quite heavy. The market voted on the food entity's latest earnings report. Should investors listen to this opinion and immediately put in sell orders?

According to Theflyonthewall, the business, whose colleagues include ConAgra Foods, Inc. (CAG) and Kraft Foods Inc. (KFT), made an adjusted $1.38 per share during its fiscal second quarter. That was six solid pennies ahead of the overall projection. Not only was that beat cool to see, but income guidance for fiscal year 2011 saw an improvement.

As is often the case, growth and recovery in America begins at ground level. Current upbeat news from regional food producers is signaling good news for many companies, including Deere & Company (DE). While developing industrial bases such as China and India have taken on the lion's share of mid to heavy manufacturing duties, they are also developing increased needs to feed hungry work forces. Indeed, they are also developing the capital to feed those needs.

The spin-off from this morphing consumption dynamic is a surge of growth in America's agricultural and food production sectors. Indications are that the increased demands being put upon American agricultural output is fueling an increased demand for heavy weight farm tractors and is requiring food processing facility expansions. "Sales of 100-horsepower tractors, which cost about $75,000 to $100,000 each, were up 27 percent last month over the same month last year, said Charlie O'Brien, vice president of agricultural services for The Association of Equipment Manufacturers, in an Associated Press interview.

Tuesday morning, Kellogg (K) announced that its third-quarter net income dropped 6% thanks to slumping cereal sales. In addition to the weakening cereal sales, Kellogg saw competition strengthen and continuing impact from a cereal recall.

First things first, the cereal king reported earnings of 90 cents per share ($338 million), which came in lower than last year's earnings of 94 cents per share ($361 million).

Yet again, McDonald's (MCD) has asserted itself as the Big Mac Daddy of the fast-food world, reporting that its third-quarter earnings increased 10%. Proving that it does not rely solely on hamburgers and cheeseburgers, McDonald's attributed the impressive performance to blended-ice beverages and international growth.

McDonald's pulled in an impressive $1.29 per share ($1.39 billion) during the quarter, much better than last year's same-quarter results of $1.15 per share ($1.26 billion). Quarterly revenue also increased, checking in at $6.3 billion, which is 4.3% better than a year ago.

Tuesday morning, food-producer ConAgra (CAG) announced that its first-quarter net income fell to 33 cents per share, compared to 37 cents per share a year ago. The earnings were also short of the consensus estimate, which called for earnings of 39 cents per share. The food firm blames the results on tighter competition, inflation and the sluggish financial situation.

Breaking the numbers down a bit, the company's consumer food segment saw sales drop 2% to $1.82 billion. This facet of CAG's business comprises roughly 65% of the company's revenue. While this segment was making hay while more consumers were eating at home, a drop thanks to discounting in frozen food, table spreads and popcorn led to the poor performance.

Del Monte Food Company's (DLM) stock wasn't one you wanted to be in today. Especially at a time when the bulls are in charge. The company, whose colleagues include ConAgra Foods, Inc. (CAG) and Kraft Foods Inc. (KFT), was down 2.1% to $12.56 about thirty minutes before the close of the session.

First-quarter data was reported by the business this morning. The market obviously wasn't too pleased. According to an article over at TheStreet.com, profit from continuing operations was 29 cents per share. This figure was two pennies above the estimate generated by the analysts. No matter what the traders are doing to the stock, at least shareholders can be happy about that aspect of the period.

I'm going to take a brief look at two stocks that traded on Friday based on earnings reports. Both can be found in the foodstuffs industry. And both beat Wall Street's projections. But which one do I prefer?

Hormel Foods (HRL), the company behind the Spam and Dinty Moore brands, made 63 cents per share in the fiscal third quarter, which, according to Reuters, was three pennies ahead of the estimate. But the good news doesn't stop there: guidance for the full fiscal year was increased.

The shares of Newell Rubbermaid (NWL), first discussed here on April 26, 2009 at a price of $8.08, have largely meandered this summer, and that's created an opportunity for moderate-risk investors who missed the $8 entry point. Here's why:

Look for Newell's 2010 revenue to increase 2% to 4%, with improvements registered in all business units, led by home and family, which includes food containers.