Energies
A pipeline burst in Minnesota was a blip on the screen (despite being the source of about 15% of U.S. imports), erased by a continuing trend in bearish inventory data surprises. A late winter, declining geopolitical concerns and rising inventories setup a top in energies. I am looking at bear put spreads and for a retracement to about $76 on crude before some real support comes in. The OPEC meeting this week should spark continued selling.

Financials
Volatility in the stock market is at impressive extremes, but lacks enough of a trend to suggest that volatility will not sustain itself much longer. I see selling strangles and looking for a range bound market through year's end. Bonds continue to show incredible strength despite a bouncing stock market and should benefit from recent Fed speak that suggests continued rate cuts ahead. The support in the dollar gives even more reason for a Fed cut as inflationary risks will be diminished if the dollar rallies. I look for bonds to develop a short term correlation to the dollar and for both markets to see continued upside in coming weeks. I would short the euro and pound, and buy the yen and wait for Canadian to close below 9860 before jumping back short.

Grains
Soybeans took a break from its recent bull run as the grains retraced on Friday. All the grains appear technically strong and I suspect a December rally is upon us. I would buy the dip in beans. Corn lacks the same fundamental and technical justification, but I would maintain a minor corn long position moving forward. Recent fundamental issues with wheat bring it back into the fold as a bull market, but there is a lot of risk and volatility premium in this market right now. I look at selling $12 March calls even if maintaining a bull position. Demand from China should continue to surge rice and it remains a breakout bull play.


**Chart courtesy of Gecko Software's TracknTrade

Meats
Talks stalled between Canada and South Korea in an effort to lift restrictions on beef imports. These talks ran side-by-side with U.S. talks and suggest that it will be sometime before South Korea lifts it ban on all cattle ages. Russia will begin importing beef from Brazil again. American Foods Group recalled some ground beef due to possible E. coli contamination. Cattle prices appear ready to tumble, but you can only cry wolf so many times before everyone stops listening. Hogs remain a buy at these levels.

Metals
Metals collapsed as the dollar supported and crude oil melted down. I look for continued downside in metals as gold sets fresh near term lows and tests the $750 area before year's end. I see straight puts and call premium collection (on bounce days) in gold. Silver put premiums are quite high and the right approach is short futures with a bull call spread as protection.

Softs
The ICO continues to forecast spiking global demand for coffee, offering price support and sparking a short covering rally that brought coffee back into a bull trend. Sustained momentum should push this market to 1.40 by year's end. OJ continues its choppy trade as warm Florida weather offsets growing spec and fund interest in this market. I remain a buyer of long-term calls on dips.

Cocoa is spiking on news that a general strike in the Ivory Coast will commence on Tuesday as growers demand increased pay. In addition I suspect we will see some ports shutting down and a total meltdown of the cocoa distribution from this key producer. This comes at a difficult time for the country not only because it just harvested this year's crop but also because of its inability to deal with this strike due to political instability.

Cotton remains a buy on dips and held just above its 200-day moving average on Friday's close. Sugar is experiencing some strong selling pressure as Brazil's Ag officials forecasted a rise in supply from last month's forecast. The Brazilian government has a long history of erratic forecasts and the forecast rose only .4%, a meaningless amount in the whole scheme of this market's oversupply situation. Lumber remains a cyclical value buy.

James Mound is the head analyst for www.MoundReport.com, and author of the commodity book 7 Secrets. For a free email subscription to James Mound's Weekend Commodities Review and Trade of the Month, click here.