The new year has not been kind to many commodity markets. This includes corn, wheat and soybeans, as well as crude oil, cattle and many others. Prices have been extremely soft in this holiday-shortened first week of 2007.

There's a basic fundamental event that started the move in grains-good precipitation in many parts of the Plains wheat belt. Plus, any commodity fund buying that was anticipated after the first of the year certainly did not materialize. In fact, the opposite occurred.

Now the prevailing thought is that index fund re-balancing will occur next week and long grain positions will be scaled back. The anticipatory nature of the market says not to wait until next week to see the market break--do it now. By next week, the market may be fixated on a totally different idea.

With the concept of corn as an energy contract still firmly in place, the break in crude oil prices has also cast a large negative shadow on corn and ethanol prices. Crude prices are on the low end of their recent range, at around $56. Actually, ethanol profitability has probably increased with the sharp break in corn and natural gas prices.

The market had an export sales report this morning, but the big dose of fundamental information will not come until the USDA reports next Friday morning. There will be so many numbers that the chance of a surprise is fairly good. Estimates should begin to circulate early in the week.

The risk of loss in trading commodities can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial situation.

The new year has not been kind to many commodity markets. This includes corn, wheat and soybeans, as well as crude oil, cattle and many others. Prices have been extremely soft in this holiday-shortened first week of 2007.