Gold liquidated some $75 last week to $1,045 as the Euro/USD gained momentum with Greece’s inability to their pay debt.  The $1,070 did hold very well but ultimately the selling pressure was to much and thats when you had it sel right to $1,045 with many sell stops being activated below $1,070.  Now the next support is this $1,035 level and I believe you will see some buyers at that level.

By Siobhan Hughes    Of DOW JONES NEWSWIRES   WASHINGTON (Dow Jones)–The U.S. Environmental Protection Agency on Wednesday gave high marks to Brazilian ethanol and cellulosic ethanol, setting a new direction for the industry as it issued standards for the amount and kinds of biofuels that may be added to the nation’s motor-fuel supply.   The EPA said that some 12.95 billion gallons of biofuels will have to be added this year, as required by law. Some 6.5 million gallons must come from cellulosic ethanol. And 1.15 billion gallons must come from biomass-based diesel over the two years through 2010.   The decision reaches every aspect of the biofuels industry, determining winners and losers from among a host of crops and production processes.Currently, corn-based ethanol is the predominant biofuel, but a 2007 law limitsthe amount of biofuel that may be derived from corn starch. The EPA must write rules to steer the nation into new types of biofuels.   The winners included sugarcane-based ethanol and cellulosic ethanol, which the EPA said were cleaner than traditional gasoline and would qualify as the sort of advanced biofuels that the 2007 law mandates. The EPA also indicated some corn-based ethanol plants may be considered clean, provided that they operate using “new efficient technologies.” That will affect the  construction of new corn-based ethanol plants, which must generate fuel with 20% less greenhouse-gas emissions than gasoline.   The mandate to use 1.15 billion gallons of biodiesel in 2010 could inject new life into the ailing industry. U.S. biodiesel producers were crippled by the lack of implementation of legislative requirements to produce more biodiesel; by the end of 2009, the industry was operating at 15% of its capacity. Total industry capacity–mostly built during the pre-recession rushto produce renewable fuels–is about 2.7 billion gallons a year.   Imperium Renewables Chief Executive John Plaza said that the rules were “the best news we’ve had in a long, long time.”   “We’ve had a rough couple of years as an industry, now we’re back into the light as being a solution to the nation,” he said in a phone interview. Seattle-based Imperium owns one of the largest biodiesel facilities in the country.   The oil industry cemented its status as out of favor with the Obama administration. The new EPA guidelines did not increase the statutory requirement for the amount of ethanol to be used this year. But in the long term, the push for increased biofuel usage threatens the profitability of the already struggling U.S. refining industry, as vegetable-based fuels replace traditional fossil gasoline and diesel. Some refiners, like Valero Energy Corp.(VLO), Sunoco Inc. (SUN)  and Murphy Oil Corp. (MUR) have bought ethanol plants in order to meet blending requirements.   By law, the U.S. must use 36 billion gallons of biofuels a year by 2022,with 21 billion of those gallons in the form of “advanced biofuels.” As part ofan effort to decide which biofuels to promote and which ones to disqualify, the EPA had to set a standard for measuring greenhouse-gas emissions from biofuels.The result was a score card that gave various types of biofuels grades for cleanliness.   The EPA said ethanol from sugarcane–common in Brazil–produces at least 50%less greenhouse-gas emissions than gasoline, the threshold for qualifying as an advanced biofuel. In a boost to algae, the EPA said diesel from algal oils also qualifies as an advanced biofuel and could be used to satisfy biodiesel mandates. Cellulosic ethanol, which is derived from the non-edible part of crops, produces greenhouse-gas emissions that are more than 60% cleaner than gasoline, the agency said.   Verenium Corp. (VRNM) Chief Financial Officer Jamie Levine said that the biggest boost for the cellulosic industry may have come from the EPA’s decision to set a price for the amount of money that blenders would have to pay forcredits in the event that they couldn’t buy cellulosic ethanol. The price appears to be high enough to support demand for cellulosic and encourage investors, he said, though he is still studying the details. Cellulosic ethanol currently isn’t broadly available on a commercial basis.    The EPA picked winners and losers after taking another look at the effects around the world of relying more on biofuels. Environmentalists have warned about the ripple effects as pastures are cleared to make room for biofuels crops. In a worst-case scenario, forests must be cleared in order to create new pastures, leading to deforestation that harms the environment because old-growth forests absorb high levels of carbon dioxide. The ethanol industry has said those claims are overstated.   EPA Administrator Lisa Jackson sided with ethanol makers on that score,telling reporters such indirect effects “were different and lesser than we thought.” She said the EPA’s earlier analyses had focused too little on productivity gains on existing farmland. She also said the EPA had decided to look at effects in 160 countries, up from 40 in its original analysis.   “I don’t agree that we changed the science to fit any outcome,” Jackson said.   Soybean-based biodiesel companies were among the beneficiaries of the review, after the EPA said that soybean-based diesel counted as an advanced biofuel. The biodiesel industry had earlier feared the worst when EPA officials said they would include “indirect land use” considerations in their calculations of greenhouse gas reduction.   But corn-based ethanol companies expressed concern that the EPA had gone too far. “EPA still relied on the disproven theory when all of the data shows that ethanol production continues to improve and isn’t requiring new land,” Jeff Broin, the CEO of ethanol producer POET LLC, said in a statement.   Environmentalists calibrated their reaction. Jonathan Lewis, an attorney with the Clean Air Task Force, said the EPA’s analysis “refutes the common misconception that biofuels are uniformly beneficial by showing that corn ethanol can be even worse for the environment than gasoline.” But he also said the EPA “appears to have bent over backward to allow some highly problematic biofuels to meet the environmental criteria set by Congress.”

INFORMA WORLD PRODUCTION HIGHLIGHTS:  Brazil soybean production 66.5 mmt, up 500 tmt from last month.  Argentina soybean production 54 mmt, up 1 mmt from last month and up 22 mmt from last year.  Brazil corn production 53.3 mmt, up 600 tmt from last month and up 2.3 mmt from last year.  Argentina corn production 18.2 mmt, up 2.7 mmt from last month and up 4.7 mmt from last year

6 more weeks of misery is what I need. Thanks Phil.

Over the past two weeks we have seen an interesting battle play out on the volatility front instead of the flat price forum. The government of Mexico bought corn straddles and strangles in July-Dec while buying a 7X1 put ratio in wheat in May-Dec. They have inflated volatility in corn by 3-4% while in wheat volatility is up 3-5%. This is an inequity that was reversed today, in a big way. As talked about this morning during the broadcast, wheat volatility between May-July has widened to 5%. (July @ 39%, May at 34%) This was simply too juicy an apple to ignore. Paper sold both July and Dec vol with the latter getting hit hardest. Paper sold 1,000+ WZ 600 straddles starting at 160 with a standing offer at 155 going home. The pit was only bid 151 on the close. This illustrates the opportunity available if you look at markets from outside the box paying attention to abnormal skews in the optioons market.

MPI

Corn inspections at 20.696 million equates to 580 TMT. This is not enough to cause front end concern. I continue to favor bear spreads with subscribers aware of my plays.

The gold market has sold off in recent weeks as the USD takes a serious charge against other currencies to liquidate the market from $1,158 to $1,085.  There is a huge support level at $1,070 and this should be used to bottom feed the market if it gets backj down there.  looks like the Euro/USD has found a bit of a bottom at $1.40 so that should help steady the price of the Gold market for now.  It is amazing that Gold hasn’t sold off more on the move in the Euro/USD from $1.52 to $1.40.  Gold is only down $120  or 6% in that time.

Crude Oil has declined from the overcrowded market above $80 and now has sold off to the 200 day moving average of $73.50.  This is a very critical support area and with rising inventories and a strengthening dollar it looks like it is only a matter of time that the $73.50 mark gets broken.  Unemployment still unhealthy and job creation at an all time low is not good for the energy sector.

It’s no coincidence that Barack Obama has made the decision to forge an all out effort at directing attention to paint our financial institutions as “the source of all that is evil” in the United States. Obama has lost healthcare by losing Massachusetts and it is becoming increasingly obvious that his administration desperately needs something else to make them pertinent .. and they need it quick. So attacking the “evil doers” is ideal. This is all about getting the people back on his side and since most Americans aren’t particularly fond of banks or credit card companies, they seem an appropriate, if not ideal, scape goat. “Banks are easy targets for a demagogue.”

Is Obama ready to die on this? He foolishly (in my opinion) now has Democrats scrambling for a new issue and focus and this one should serve to provide Democrats a position to make them look like the good guys, (you know fighting for the little man). At the same time it forces the foolish Republicans to take the opposite side and try to defend Wall Street. Combine this with The recent Supreme Court ruling regarding political “Free Speech” and the role of corporate money and ….well, it sets the tone for another round of “wealth envy,” and likely the true motive to play in the coming November elections. But is it worth the fight? What things bad could happen?

The agricultural markets lacks any real fresh information leading to the choppy two sided market in beans and corn. The bearish tone is winning due to sagging macro markets and an overall quiet tone to start the week. I like a rally this week due to oversold technicals and commercial interest in corn at current levels.