Energies

OPEC's decision to keep output unchanged came as a bit of a surprise this week, as calls for supply increases amid high energy prices went unanswered. Saudi Arabia's independent effort to increase supplies is unlikely to be overly impactful. Regardless, I do anticipate a strong decline in energy prices in coming weeks as the focus gravitates towards the global economy and the potential decline in world demand for oil.

Financials

Stocks continue to slide amid growing concern over a return to economic recession. I do not believe the U.S. economy ever left a recessionary environment, as the country maintained a static rate of high unemployment, a growing deficit and a defunct real estate market. The overbought conditions in the stock market suggest that a top is in and the market has a long slide ahead of it. Sell the bounces. Bonds remain a buy as the market realizes the Fed lacks motivation to raise rates during this period. The dollar is a buy on dips and I expect a run to 78 in the near term. The euro, pound, Canadian and Aussie dollars remain sells.

Grains

The USDA's updated production estimates for corn were cut over 300 million bushels, spiking corn prices to fresh near term highs and surging past wheat. This historic spread reversal is an indicator of the corn market's supply-side fragility and the potential for panic short covering remains strong. However, over time this is one of the best spread trade setups I have ever experienced and I believe that using a synthetic spread position with near the money options (wheat calls and corn puts) will play out successfully over a 6 month time frame. Near term, however, chaos is likely to continue. Beans and rice remain short plays.

Meats

Cattle is likely to break back into double digits this month as I suspect a freefall selloff has the potential to occur over the summer. Hogs, on the other hand, have shown strong support near term and are only a sell on a break to fresh lows.

Metals

Silver and gold both appear ready for another strong price correction, with gold selling perhaps leading the charge this time around. I recommend bear put spreads in both markets. Copper remains a sell as the global economic growth trend reversal should be very impactful to copper prices in the intermediate term. This market is resisting the fundamental shift that is occurring, opening up an opportunity to get short near contract highs.

Softs

Coffee remains a strong sell as a lack of frost concerns combine with an overbought market and a weakening bull fundamental or technical argument to setup a plunge to sub-$2 prices. Cocoa tested trend line support on a monthly chart and held, supporting out a bit in the past week. The week ahead is critical to the reestablishment of a downtrend as the lows should be penetrated before the month is out. Cotton is offering a wild spread consolidation as the July contract sells off and the back months rally. This tightening is happening very quickly and should ultimately mean a bear trend in all contracts will likely develop. Sugar's rally should be short-lived and sold into with straight put buying. OJ is congesting near the highs and is a strong sell with puts.

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.