The grain markets are highly weather dependent. The slightest whisper of a weather change can move grains by large magnitudes. And with crops in Canada and China in danger of freezing, some grains recorded two-year highs.

Western Canada experienced frost last week, damaging the region's crops, including wheat, canola and barley. Similarly, parts of China also experienced freezing weather, threatening some grain crops there. Meanwhile, in Russia, the severe drought, which caused the country to ban wheat exports, is continuing. Russian farmers have planted 39% less winter grains this year, according to Bloomberg.

Rumors move markets, especially the commodity markets. The story of the day is a rumor that corn yields will be lower than forecast. The United States Department of Agriculture (USDA) originally forecast corn yields to be 165 bushels per acre. However, with the weather being hotter and drier east of the Mississippi, yields could come in lower, as reported by the Associated Press.

That sparked a rally in corn futures with the December contract up 17 cents to $4.64 per bushel (each one cent equals $50). Wheat prices are benefiting from the drought in Russia and Russia's export ban. December wheat futures shot up 27.5 cents to $7.41 per bushel. Soybeans also were higher by 26 cents to $10.35 per bushel for the November contract.

In a move that is creating havoc in the grain markets, Russian Prime Minister urged a temporary ban on Russian grain exports. The ban may begin as early as next week and would last through December.

Putin said the a ban would be "appropriate." Russia has "sufficient reserves of grain, but we must prevent domestic prices from rising, preserve cattle herds and build up reserves for next year."

TheStreet.com's Jim Cramer says the writing's on the wall, so position yourself accordingly.

If the ethanol mandate is scratched, what will that do to Potash (NYSE: POT) (Cramer's Take) and Mosaic (NYSE: MOS) (Cramer's Take) and Agrium (NYSE: AGU) (Cramer's Take)?

Here's the answer every hedge fund knows: It will not let you raise numbers in the out years.

Right now there is a tremendous struggle going on about near-term and far-term earnings growth and what we can expect to see. Everyone knows when Mosaic and Potash report next week that the numbers will be beaten and the estimates raised.

Everyone knows that the numbers will be far better than whatever drove Bank of America (NYSE: BAC) (Cramer's Take) up 80% in less than a fortnight, that doubled Wachovia (NYSE: WB) (Cramer's Take).

But so what? If you scrap the ethanol mandate or if people even think that it will be scrapped, you will see grains collapse just as quickly as oil collapsed when we found a level we didn't need it -- remember, we don't "need" ethanol, but it is mandated.

Shares of chemical maker EI DuPont de Nemours & Co. (NYSE: DD) are trading slightly higher in the premarket after the company reported a rise of 26% in its first quarter. The chemical maker also affirmed its second-quarter and full-year earnings outlooks, but warned about a weak domestic demand that is likely to put pressure on growth outside the country through the rest of 2008.

For its most recent quarter, the giant chemicals maker said its profit climbed to $1.19 billion, or $1.31 a share, compared with $945 million, or $1.01 a share reported in the same period a year ago. Analysts had expected DuPont show earnings of $1.29 a share, according to Reuters Estimates.

Looking at revenue, DuPont saw a growth of 9% to $8.58 billion, inline with analysts' predictions. The third-biggest U.S. chemical maker had to face continued economic worries such as higher fuel prices and declining housing markets that put a curb on consumer spending. However, the company was able to successfully surpass those obstacles, helped by the weak dollar and higher selling prices that offset flat domestic sales.

This morning, better-than-expected earnings results at Morgan Stanley (NYSE: MS) eased investors' fears about the weak U.S. economy. Shares of food maker General Mills Inc. (NYSE: GIS) have been also rallying in early trading after posting a surge of 61% for its third quarter profit.

The company said its quarterly profit climbed to $430.1 million, or $1.23 per share due to higher demand for its products. Excluding one-time items, the company's earnings figures came in at 87 cents a share, exceeding analysts' forecast for a profit of 79 cents a share.

General Mills posted 12% growth for its third-quarter revenue, which surged to $3.41 billion from $3.05 billion a year ago. This was above analysts' predictions for revenue of $3.24 billion in the quarter, according to Thomson Financial.

Agrium (NYSE: AGU) volatility is flat as AGU at record high on strong fertilizer demand. AGU, an agricultural retailer and fertilizer producer, closed at $54.38. AGU over all option implied volatility of 39 is near its 26-week average of 38 according to Track Data, suggesting nondirectional risk.

Terra Industries (NYSE: TRA) volatility is flat; TRA is near record on demand for nitrogen. TRA, an international producer of nitrogen products for industry and agriculture, closed at $31.26. TRA is expected to report EPS on 10/25. TRA over all option implied volatility of 52 is near its 26-week average of 50 according to Track Data, suggesting nondirectional risk.

Option update provided by Stock Specialist Paul Foster of theflyonthewall.com.