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UPDATE: Forget QE2, Big Moves In 'This' Trade 

Most investors spent Friday focused on the jobs report and whether the lousy numbers increased the likelihood of more quantitative easing.

However, the Fast Money spotted another catalyst entirely and it's led them to a slew of trades.

Specifically, they’re gaming the ag space after the government stunned the market with the latest harvest report – it showed the corn harvest will be much, much smaller than both analysts had expected and the government had previously forecast.

Where’s the Fast Money putting their dollars to work?

Instant Insights with the Fast Money traders

We’re talking about half a billion bushels less than expected, explains OptionMonster Jon Najarian. I think the way to play it is long fertilizer names such as Mosaic . (Higher corn prices give farmers more money to spend on fertilizer and encourage more planting of the crop.)

According to a note out of RBC, typically Intrepid Potash, Mosaic and Potash are the most correlated to the price of gains, adds host Melissa Lee.

There had been bearish fundamentals in place for corn but that worked off very quickly, says Joe Terranova. This suggests the ag trade has legs. It also suggests inflation is back on the table.

’Saying the ag trade still has legs’ is an amazing statement considering since June corn is up 33%, wheat is up 42% and soybeans are up 18%, muses Fast Money host Melissa Lee.

Farm equipment makers such as Caterpillar and Deere spiked on the news, adds Steve Grasso. Typically spikes in these stocks also trigger a lot of short selling, but we’re not seeing that right now. That too suggest the ag trade has legs.

I think these developments are good for fertilizer stocks, adds Tim Seymour. I like Monsanto and Syngenta. But I was surprised by the run in ag equipment names such as Deere. I’m not sure the price increases mean farmers are going to buy more equipment.

Deere on valuation doesn’t make sense to me, adds Guy Adami. If you have profits in this stock I’d take some profits.

Higher prices in soft commodities will likely to lead to margin compression for manufacturers, reminds Patty Edwards. That could send prices of things like cereal higher.

I expect that food manufacturers are hedged through the end of the year, says Karen Finerman. If the spike in corn is a one day event the sell-off in this space is overdone. However if we’re looking at a trend, then food makers are challenged.

If you’re looking for a short look at Smithfield Fields, Tyson and other companies that are harmed by higher corn prices, adds Najarian. They feed grains to their livestock and as a result their inputs costs will likely go up.

If food prices go up sharply at the supermarket, then retailers could be challenged this holiday season as they try to squeeze dollars out of consumers, adds Edwards.

I expect traders to scramble and chase the grains higher, says Rich Ilczyszyn: Lind-Waldock Senior Market Strategist. Traders who short tend to use the monthly high as a stop loss and right now we’re up against it. Watch the space on Sunday night.


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Trader disclosure: On Oct. 8, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AAPL), (AA), (BAC), (GE), (GOOG), (INTC), (MON), (POT); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (BTU), (NUE); Finerman's Firm Is Short (IJR); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (MDY); Finerman's Firm Is Long Russell 2000 Puts; Finerman's Firm Is Long S&P 500 Puts; Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC), (BAC) Preferred; Finerman's Firm And Finerman Own (CVS); Finerman's Firm Owns (GENZ); Finerman Owns (GOOG); Finerman's Firm Owns (JPM), (JPM) Leap; Finerman Owns (JPM); Finerman's Firm Owns (MSFT); Finerman's Firm Owns (POT) Calls; Terranova Owns (APA), (AAPL), (IBM), (OXY), (RSH), (UPL), (XBI), (JOYG), (C), (AXP), (SWN), (AGU), (EOG), (HES), (OIH), (ORCL), (SU), (VRTS), (FTO), (RIG), (PEP), (POT), (CRM), (CF); Terranova Owns (TBT) Calls; Terranova Owns (FFIV) Puts; Terranova Owns (FCX) Put Spread; Terranova Owns (JOYG) Put Spread; Terranova Owns (GLD) Puts; Jon Najarian Owns (POT) Call Spreads; Jon Najarian Owns (MOS) Call Spreads; Jon Najarian Owns (ADBE) Call Spreads; Jon Najarian Owns (GS) Call Spreads; Jon Najarian Owns (MS) Call Spreads; Jon Najarian Owns (JCP) Call Spreads; Jon Najarian Owns (IMGN) Cal Spreads; Jon Najarian Owns (AAPL) Call Spreads; Jon Najarian Owns (NYX); Jon Najarian Owns (CME); Jon Najarian Owns (CBOE); Jon Najarian Owns NYSE Euronext, CME Group, CBOE Seats; Terranova Owns (APA), (AAPL), (IBM), (EOG), (HES), (OIH), (OXY), (ORCL), (RSH), (UPL), (SU), (VRTS), (XBI), (FTO), (JOYG), (RIG), (C), (PEP); Terranova Owns (TGT) Calls; Grasso owns (ASTM), (BA), (BAC), (C), (CSCO), (JPM), (LPX), (MO), (MOT), (NDAQ), (PFE), (PRST)

For Patty Edwards
Edwards Owns (GLD) For Clients
Edwards Owns (PGM) For Clients
Edwards Owns (SYT) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (AMZN) For Clients
Edwards Owns (BAC) For Clients
Edwards Owns (JPM) For Clients
Edwards Owns (C) For Clients
Edwards Owns (CME) For Clients
Edwards Owns (INTC) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (AAPL) For Clients

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DRYS)

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (AMGN)
Stuart Frankel & Co and it’s partners own (COG)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)

For Rich Ilczyszyn
* No Disclosures

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