Only the brave or the foolish would make predictions about the future amid the biggest market upheaval in three generations. But it is already clear the crisis is profoundly reshaping the commodity trading industry. 
 
Our commodities and energy columnist John Kemp, formerly an economist for RBS Sempra in London, lays out his thoughts on how the industry will be remade over the next few years. Click here to read. 

Nearly 20 foreign correspondents showed up this week to a meeting at the Chilean Copper Commission (Cochilco) to hear the world’s top authority on copper give guidance on where prices were headed.

Maybe copper has not been the sexiest story.  But as a mining correspondent based in Santiago, it must be the first time I’ve attended a news conference where most of the reporters had absolutely no clue about the metal.

Maybe copper has been taken for granted here. For as the copper futures price halved in a matter of months, the news corps is suddenly very interested in a metal that is central to Chile’s economic future, accounting for over 50 percent of exports and the lion’s share of government revenue.

As a regular at the commission over the past three years, I can say most of the other correspondents had never before set foot in the Cochilco building in downtown Santiago.

“It’s that everybody wants to know where the economy is going,” one correspondent said when I asked if she was now covering copper.

Copper prices are falling due to slowing demand in a world economy where fewer cars are being built and construction activity is declining …  good for consumers perhaps but bad for producers and a worrisome indicator of the global economy.

High copper prices made possible Chile’s record government surpluses in recent years and also helped the government sock away $21 billion for a rainy day in sovereign wealth funds.

With signs of a slowdown in No. 1 consumer China, the destination for  much of Chile’s copper exports, the burning question for reporters here is whether copper has lost its sheen for good.

CANCUN - Usually chummy executives were playing duck and cover at this year’s Latin American steel conference, as markets spiraled out of control and companies consider cuts in output to combat falling steel prices.  Had the conference been held at the beginning of the year when steel prices were reaching record highs, it would have been another story. Today, instead of back-slapping and champagne glasses there are a lot of furrowed brows and pointed avoidance of journalists.

This reporter experienced a flurry of calls from otherwise friendly and enthusiastic PR people cancelling interviews that were arranged before the conference. Among the litany of reasons: “blackout period before earnings,” “times of uncertainty,” or simply “he didn’t show up.” Many of the top CEOs on the agenda decided to stay at home and work out their strategy in the face of falling world demand for steel amid a global recession.

At the opening cocktail reception, I overhead two company executives discussing the sighting of “one of those” from the AP – as if reporters were circling vultures, trying to pick the bones of the executives.

And chasing after CEOs as they slip behind closed doors, it was hard not to feel that way.  When I was lucky enough to corner them, they joked about how they will only answer questions about the weather, or they just smiled and said nothing.

    It sounds like a broken record but Chicago Board of Trade grain markets look set to ignore conditions in farm country and focused on Wall Street in the coming week. 
    Grain traders, like all financial market participants, are being affected by tighter credit, down-sizing by squeezed hedge funds and other big speculators, and worries about global demand for commodities being slammed by global recession.
    Corn and soybeans finished Friday near one-year lows while wheat prices fell to the lowest in 16 months as stock markets around the world continued to plummet. It was just a few months ago when all three hit record highs as hot money flowed into grains and other commodities on an outlook for strong demand and tight stocks for raw materials from grains to metals.
    Trader commitments data on Friday afternoon from the Commodity Futures Trading Commission showed large speculators finally turned net short in CBOT corn and soybeans in the week ending Tuesday, Oct. 21, after weeks of exiting long positions.
    In CBOT wheat, big speculators further expanded their net short position.
    It’s a global “margin call” — and global liquidation, as Rich Feltes, senior vice president and director of MF Global Research, described the recent market activity last week.
    No one seems to care that the corn harvest of the world’s largest producer is running at least two weeks behind, a factor which usually supports prices in the autumn. 
    November is fast approaching and not even half the U.S. crop is out of the fields. Chicago traders estimate USDA will report in its weekly update on Monday afternoon that roughly 40 percent of U.S. corn is harvested, versus the seasonal average around 70 percent by late October.
    But who cares when stock markets around the world continue to ratchet lower and erase trillions of dollars in paper wealth as fears spread. A credible solution to the world credit crisis continues to elude world leaders and, meanwhile, a flight to anything by U.S. Treasury securities and government-insured bank and money-market securities seems to still dominate.
    On the NYSE, traders sighed in relief on Friday when the Dow Jones Industrial average closed only a little more than 300 points lower, recovering from an early 500-point drop. So all eyes among CBOT grain traders will be on what happens in Asian markets tonight.
    If Wall’s Street fear index — the Chicago Board Options Exchange Volatility Index, is any indication, hold on tight.
    The VIX <.VIX>, a leading indicator measuring the change in an S&P stock index price over a given period as a percentage, soared to a record high of 89.53 on Friday, sending more investors fleeing as far away from risk as they could get.
    Grains didn’t escape the maelstrom.
    Futures sank. But the most interesting indicator of the grain markets’ jangling nerves was seen by the spike in corn options volatility. CBOT December corn options volatility soared to 57 percent by the close, up 7 percentage points on the day. That compares average volatility of about 30 percent at this time of year when corn prices typically work to season lows as vast new supplies are harvested and move to elevators.
    “You would expect vols to be up during the summer when crop yields are under question. It’s unheard-of to see these levels in the fall when we’re in the midst of harvest,” said one CBOT  broker with numerous commercial grain firm accounts.
    The last time he could remember volatility this high was in 1988 when the U.S. Corn Belt was threatened by drought losses.
    So grain traders remain as distracted and unnerved by outside factors as all other U.S. and world markets. Add a fresh factor to the mix: news on Sunday afternoon in the Midwest that U.S. helicopters and commandos attacked a farm inside the Syrian border with Iraq on Sunday, killing eight civilians, according to Syria’s state television.
    Another twig added to what seems a witches’ brew for the markets. It all adds up to one thing for grain markets starting on Sunday night: the roller coaster ride continues.

Political and financial leaders were working over the weekend around the world to find ways to calm the growing fears on Main Street and Wall Street as the burgeoning world credit crunch resists solutions. That cloud of doubts of necessity will hang over all financial markets, including grains and other commodities, in the coming week.
    In Washington, President Bush met with G7 economic chiefs and officials from the IMF and World Bank. In Paris, European leaders hoped to agree on detailed plan on Sunday to prevent  the spread of further panic. In Britain, banks were in crisis talks with the government and regulators which could see the government take multi-billion-pound stakes in several lenders. Australia and New Zealand announced they would guarantee bank deposits. 
    The deepening credit crunch has spawned fears feeding fears and wiped out trillions of dollars of paper wealth in stock and bond markets in recent weeks, creating a climate of worry that has dried up credit for many traders too. The Dow industrials  fell for the eighth  day in a row on Friday  in its worst week ever, dropping below the 8,000 mark for the first time in 5-1/2 years. 
     The panic spilled over to commodities  as the Reuters-Jeffferies CRB commodity index <.CRB> posted its sharpest weekly loss ever as selling in crude oil and other raw materials intensified. Plummeting grain prices added to the weight.
     But in Chicago corn and soybean futures  also got a double dose of bearish fundamental news on Friday. The U.S.  Agriculture Department lowered its price forecast for grains  in part because of the financial turmoil worldwide, which will weigh on exports and food purchasing power overseas. USDA also bumped up its estimates of the size of the 2008 American corn and soybean outputs. 
    USDA forecast a farm-gate price of $4.70 a bushel for the 2008 corn crop, down 80 cents from its forecast one month ago. Soybeans were forecast to average $10.35 a bushel, down $2, and wheat to average $7, down 25 cents. 
    Nearby Chicago Board of Trade corn futures closed just above $4 while soybeans finished around $9 after both markets  dove by their respective trading limits (30 cents in corn and 70 cents in soy). Both are now near 12-month lows, as spot corn futures have been trading above $4 since December 2007 and spot soybeans have held above $9 for the past year. 
    Expanded limits go into effect beginning Sunday night for the start of trading in Asia: 45 cents in corn and $1.05 in soybeans. 
    All the bad news comes just as American farmers rev up for harvest across the heartland. Autumn weather has been ideal for harvesting. Warm days, little rain — giving late-planted crops time to ripen and reach their maximum yield potential, a factor USDA no doubt worked into its upward revisions for corn yields and production in last week’s monthly supply-demand update. 
     The coming week will offer plenty of volatility as the world tries to catch its breath  in the worst financial crisis since the Great Depression.  
    
PHOTO: Freshly harvested soybeans being unloaded in central Iowa farm field near Ames. USDA to release its next crop progress report Monday afternoon. Taken by Chris Stebbins.

Oil prices are slipping this morning, reacting more to dimming prospects for U.S. growth after a report showed job losses in August than the tropical storms building in the Caribbean.

October crude was last down close to $2 at $105.92 a barrel on the NY Merc — just about the level Iran’s OPEC governor said on Friday is “appropriate.”

Here’s a look at some of the story planning on the Reuters energy team today:

• Checking in on Hurricane Gustav cleanup - it’s been slow. (MMS releases updated production data from Gulf of Mexico in Gustav’s wake (1800 GMT)
• Checking on Entergy’s work to restore power, repair damaged grid
• From Caracas, details of any impact on oil industry from Monday’s electricity blackout.