U.S. wheat futures were predicted to begin the day session trading 8 to 10 cents higher Tuesday, as surging wheat values in Europe and an increase in world export business were expected to boost prices. World wheat markets remain very firm, European wheat futures made a new high overnight, and there has been a flurry of export business. Egypt bought 85,000 metric tons of Russian wheat and Jordan bought 100,000 tons of Russian wheat. Egypt's purchase was for prompt delivery, which will underpin the market. Demand remains very strong-with India still tendering for wheat, and Iraq recently purchasing wheat as well. Major and minor trends in wheat are higher. Corrections find buyers just like the reversal off the top on August 15. The price has gone from $5 to $6 to $7 and supply is not rationed yet. Some very savvy traders we work with talk of a wheat price at $760 and then $840.

Soybeans prices had their own liquidity crisis on August 16^th. The soybean market closed back above a broken head and shoulder neck line and closed the downside gap. The August 16^th low of 8044 is very good support. If ever there is a year where we can have "beans in the teens" it can be 2007-2008. Soybeans leased acres to corn in 2007, and that was all fine as there were ample supplies of soy in the world. Next year will be a different deal .We like the chart pattern of being long SN8 and short SX8. The margin of a spread like this is $300. Do not discount the appeal of a conservative spread like this.

The corn harvest has begun in the south and bears are playing the yield expectation game. The corn yields in the Delta sound spectacular. We think it will be a 13 billion bushel plus corn crop. That is good because we need it; the demand is that strong. The long-term U.S. corn ethanol outlook is positive amid pressing need for biofuel contribution to U.S.energy needs and the leadership that corn will display over other crops in defending the planted area base. Global corn exports originate primarily from the U.S. There the Chicago futures market, against a backdrop of tight global corn stocks, will be steadfast in discovering a price to secure the necessary planted acreage-despite attempts by other high-priced crops to grab crop land. The boom growth in ethanol might be over, but over-hype surrounding cellulose ethanol places bulk on biofuel hopes on corn. End users, index, and hedge funds alike will recognize it as a commodity with strong prospects for additional growth in demand.