The United States Department of Agriculture's acreage intentions report released Friday, March 30, 2007, caught many traders in agricultural markets off guard and prompted some sizeable moves that have continued into this week. Corn futures traded limit down two straight sessions in the first five contract months Friday and Monday. I'll take a look at the chart picture for corn, wheat, soybeans, cotton and coffee and share where I think prices could be headed next.

Corn

Corn has had a sizeable run in prices since last summer, moving from $2.60 a bushel in September 2006, making a nice breakout above $3 in November, then peaking in March 2007 at about $4.50. The market was trending down coming into the USDA report, and the bottom fell out from there. The market broke support at $3.60 on Monday, with May corn futures settling sharply lower at $3.54 ¾ per bushel and sliding further Tuesday to a settle at $3.46 1/4. While this market may try to stage a recovery bounce, I see more downside in store. I can see a continuation down to $3, where the market had broken out late in the fall.

Soybeans

This market was likewise affected by the USDA report, and while dragged down initially along with corn, soybean futures bounced back Monday, finding support at $7.50 per bushel and retracing some of the loss to close at $7.79. This market has been volatile, again breaking down Tuesday to close at $7.63 ¾.

This market had been in an uptrend since September, pulled up by the price of corn. The reversal we saw Monday pushed the market out above old highs, and even though the market gave back those gains Tuesday, I can see a test of $8 possible, near old highs from February. The USDA report was bullish for soybeans, with a potential 8.4 million acre drop in soybean plantings for the coming season. I think the market has been dragged down by corn and the decline was not supported by the fundamental situation for this market. As corn was limit down two sessions, traders couldn't sell corn and turned to selling soybeans instead. I think soybeans should start trading the way they should according to the supply and demand picture, and head higher. So I recommend buying.

Wheat

Wheat rallied to about $5.30 a bushel at end of October, and since then has drifted sideways and then down. The market had formed a nice downward channel, with prices holding within the channel until last few days when May wheat gapped down through old support. I'm currently recommending buying wheat, as we've seen support hold on several downturns just under $4.30, and I see $4.35, as a good place to establish a long position on a stop. I'm looking for the market to trend up to prior highs at $4.90. Wheat futures closed lower on Monday, with the May contract ending at $4.28 per bushel, and slumped further Tuesday, breaking to $4.19.

Cotton

Planting intentions came in the low end of expectations for cotton, so it appears this market will face reduced supply. Although there was a large carryover from last year, I see lower planting lead to lower supply, and prices heading higher. Since October, the market has been in a range between about 56.5 - 60.5 cents per pound. Monday saw a downside test of the upward trend line, which we saw hold. I am recommending buying December cotton, and if the market can break above 61 cents per pound, add to your position with a buy stop. I'm targeting a move to old highs of about 63.5. I'd put my stop at 58 and look to reenter the position around 56.

Coffee

Coffee has been in a sharp downtrend since peaking at $1.30 a pound, but I see support at $1.08 and $1.05 holding. I'm recommending a countertrend trade as a possible strategy, as I think the market will find support at $1.08. Short-term supply looking good due to Brazilian crop and keeping prices suppressed, but long-term supply is looking to diminish, and I see prices recovering. I am recommending buying May coffee futures at about $1.08, with a stop below $1.05 - $1.04. Aggressive traders could look to get short at $1.04, and if the market drops below there, there could be a move down to $1.00. If this market takes off, watch for a break in the trendline at about $1.20 for a sharper move on to higher highs.

Matt Roma is a Senior Market Strategist at Lind Plus, Lind-Waldock's broker-assisted division. He can be reached at 866-231-7811 or via email at mroma@lind-waldock.com.

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