Markets look to explode higher today as overnight maps enhanced heat and removed rains.

From Reuters:

 The health of U.S. corn and soybean crops deteriorated more
than expected last week as temperatures heated up in key growing
areas and stunted development of late-planted fields.
    After the market closed on Monday, the U.S. Agriculture
Department's weekly crop condition report showed that the U.S.
corn crop was rated 66 percent good to excellent, down 3
percentage points from the previous week.
    The decline in corn ratings was the biggest weekly drop in
three years.
    Soybeans were rated 64 percent good to excellent, 1
percentage point below analysts' expectations and 2 percentage
points below a week earlier. The 10-year average for this time
of the year is 61 percent good to excellent, and USDA rated the
crop 67 percent good to excellent a year ago.
    High temperatures in the 90s Fahrenheit or more along with
high humidity were expected throughout the Corn Belt this week,
but the high pressure ridge was seen breaking down on Friday,
according to the latest forecasts.
    The crops, however, remain vulnerable to extreme
temperatures. Severe heat during corn pollination, which
normally occurs in late July, can diminish yields.
    Soybeans, which are also widely grown in the Midwest, are
still a couple of weeks from their critical pod-developing
stage, but the forecast for little precipitation in July is
supportive for the market.

Gasoline and Heating Oil are both up this morning but not as much as crude as the cracks will likely continue to get weaker from here. What’s also weighing in heavily on the market is supplies. An Energy Department report may show U.S. crude supplies fell 1.5 million barrels for a seventh week in the seven days ended July 15.   Gasoline inventories probably slid 100,000 barrels from 211.7 million.

Gold reaching new heights last night to over $1,590 an ounce. The flight to safety has pushed this market and the silver market higher. Silver up over $38 per ounce looking to try and reach $40 for the first time in a while. Weakness weighing on the US dollar after Bernanke hinted that there might be room for the Federal Reserve to add more stimulus.

Ok, so Italy is pledging to take action for its debt issues. Here is the thing! If the euro zone lets Greece default than where does that leave everyone else? Are they too far gone as well? Systemic risk is the word that typically accompanies the word fear. The fear that is being portrayed could raise the cost of commodities world wide. Japan has to basically build an entire country and the growth of the world is escalating. Prices on materials, grains, oil, etc are very high and knowing that Japan hs to build could keep these costs at their highs.

The USDA just released the monthly WASDE - download the pdf here: http://www.usda.gov/oce/commodity/wasde/latest.pdf

Excerpts:

U.S. wheat supplies for 2011/12 are raised 90 million bushels as higher carry in and production more than offset reductions in imports and higher use. Beginning stocks are raised 52 million bushels mostly reflecting higher estimated carryout for 2010/11 as reported in the June 30 Grain Stocks report. Production for 2011/12 is forecast at 2,106 million bushels, up 48 million from last month as higher winter wheat production and higher forecast yields for durum and other spring wheat more than offset lower area as estimated in the June 30 Acreage report.

U.S. feed grain supplies for 2011/12 are projected higher this month mostly with higher expected beginning stocks and production for corn. Corn beginning stocks are raised 150 million bushels reflecting changes to 2010/11 usage projections. Corn production for 2011/12 is projected 270 million bushels higher based on planted and harvested area as reported in the Acreage report.

Soybean production is projected at 3.225 billion bushels, down 60 million due to reduced harvested area.

All of the Soft markets came under macro pressure on Monday. The weight of Italian concerns on the Euro led to dollar strength and severe declines across the board. Cotton was limit down during the entire “traditional” session, trading synthetically as low as 10550 in CTZ. KCU settled 259.05, after reaching a low of 256.10 for the day. As 100 degree heat will be the story line across much of the nation, but the dollar is up sharply again this morning. Can the dollar continue to rally? That seems the key.

The debt situation overseas, rising inflation in China, and the U.S. deficit issue has caused a sell-off across the boards. To me this shows how little the President of the United States has and how powerful Congress is. If the United States loses its credit rating than China could pull out of the treasuries it owns. For the President, Geithner, and Bernanke having to speak the situation is getting worse. Earnings is not a focus because we all know many companies are financially sound after being able to save for the past 3-4 years. Could corporate America be taking over the government in the future? Could the U.S. be like the Roman empire? After all isn’t Greece asking for the private sector to bail them out?

I am sure everyone has seen the job numbers today. Nonfarm payrolls rose by 18,000 which is the weakest announcement since September, below the 90,000 rise that economists expected. The economy has to create between 125,000 -150,000 new jobs a new month to show the new work force entering the market. The government is looking toward the private sector to bailout the world. They want insurance companies, hedge funds, etc. to buy the treasuries when the debt ceiling is raised. They want this sector to jump in and help Greece. Oh, and let’s not forget NASA wants the private sector to help them too. Sounds like Desperation if you ask me.

So the current administration wants to add taxes to those who work hard and are successful. What is this Robin Hood! This might make people not attend college for fear if they do make a good living that  they may not make as much as in the past. Sure, lets tax those that are spending and force people to leave the country. How come no one is asking about the stress test on banks? It looks as though we are so concerned with China and Europe that we forgot about how the banks are holding up. We know they are cash rich from laying people off, not giving loans out, etc.

There are questions that you should be asking yourselves. Does the fact that Greece received a bailout save the country from falling off the cliff? Can the euro and dollar both fall at the same time? Is the U.S. government going to raise the debt ceiling? Are consumers struggling? If salaries are not rising and gas and food keep moving upward the consumer will not have the money to spend. Companies are storing cash and not hiring just in case there is another financial crisis. The stock market continues to rise, in my opinion to create a buffer in case the market does crash. This is when we must trade on fundamentals and news as it streams in.