The trade deficit unexpectedly narrowed in August as exports notched a slight gain and imports plummeted on declining demand for foreign oil. The deficit rose 3.5%, which surprised economists who expected that higher oil prices would raise the deficit, reports Martin Crutsinger for the Associated Press. Economists still expect the deficit to rise in coming months.

The U.S. dollar his risen to session highs this morning against the yen. The rally was set off by comments made by Federal Reserve Chairman Ben Bernanke, indicating that monetary policy would tighten as the recovery takes place. PowerShares DB US Dollar Bullish (NYSEArca: UUP) is up 0.6% this morning.

Corn and soybean crops are being forecast for record harvests, even though there were concerns earlier that a cold growing season would shrink the crops, the Associated Press reports. Corn production is predicted to be up 8% from 2008, and soybeans are forecast to be up 10% from 2008. PowerShares DB Agriculture (NYSEArca: DBA) is up about 0.6% this morning. The fund holds corn and soybean futures. (DBA is going through changes. Read about them here).

No major earnings are in the pipeline for today, but next week should be a busy one. Reports are scheduled from Intel (NasdaqGS: INTC), Johnson & Johnson (NYSE: JNJ), Citigroup (NYSE: C), Google (NasdaqGS: GOOG), Goldman Sachs (NYSE: GS) and General Electric (NYSE: GE).

Some commodities have performed a bit better than others in recent months.  Now that inflation fears have been put on the back burner by the Federal Reserve, will the commodities that outperformed this year resume their uptrends anytime soon, or simply hold steady for the time being? No one knows, so watch the trend lines for signals.

If the prices continue to decline from this point, have an exit strategy in place to protect yourself. We watch for positions to decline 8% off their recent high or below their 200-day moving average.

TraderMark has identified the ten hottest commodities for the year and their corresponding ETFs (although in some cases, be aware that there’s more than one way to play these commodities). Be sure to understand which commodities hold what – some hold physical commodities, some hold futures and others hold the stock of companies involved in their production.

• Unleaded Gas, represented by the United States Gasoline Fund (UGA), up 68.3% year-to-date.
• Copper, which can be accessed through the PowerShares DB Base Metals Fund (DBB), 32.3% year-to-date
• Crude Oil, represented by the PowerShares Dynamic Oil Services (PXJ), up 23.2% year-to-date
• Orange Juice, which can be exposed through the Market Vectors Agribusiness (MOO), up 24.5% year-to-date
• Silver, which is represented by the iShares Silver Trust (SLV), up 23.3% year-to-date
• Sugar, which is seen in the  iPath DJ AIG Sugar (SGG) up 32% year-to-date
• Coffee which can be accessed through the iPath DJ AIG Coffee (JO), up 6.4% year-to-date
• Soybeans, which comprises 25% of the assets of the  PowerShares DB Agriculture (DBA) is down 0.4% year-to-date; exposure to both corn and wheat, two of the nation’s largest commodities can be accessed through DBA as well
• Heating Oil, which can be exposed through the United States Heating Oil Fund (UHN), up 22.2% year-to-date
• Nickel, which is represented through the iPath DJ AIG Nikel (JJN) up 31.5% year-to-date.

For more stories on commodities, visit our commodities category.

Kevin Grewal contributed to this article.

Let’s face it, everyone has to eat, regardless of economic conditions.  With population growths in emerging market countries, extended life expectancies and an overall desire for more food by consumers, the demand for food will continue to increase, which in turn, will cause an increase in demand for staple commodities such as corn, soybeans, wheat and sugar.  This domino effect could lead to an increase in value for related ETFs, such as agricultural ETFs.

Michael Kahn of Barrons states that all four of these staple commodities have lost a significant amount of value this year. This decline in value, along with other factors, has Kahn making a bullish case.

Does this suggest that agricultural ETFs are bullish? Only time can really answer this question. After all, one must keep in mind that although this demand for commodities will most likely continue to increase, there are other factors, a rising value in the dollar, just to name one, that could curtail this demand effect on the price of commodities.

Our strategy is to use the moving average to determine when we should be in. Right now, this fund is below both its 50-day and 200-day moving averages. When it crosses those points, it might be worth considering whether it’s right for your portfolio.

PowerShares DB Agriculture (DBA) is an index of corn, soybeans, sugar and wheat futures. It’s down 16.8% year-to-date.

After flooding this summer, farmers in the Midwest staged a nice rally. They’re now on pace to produce the second largest corn crop and fourth largest soybean crop in history, says the Associated Press. Corn hit a record $8 a bushel earlier this year, and is now at $5 a bushel. It’s still higher than the 2006 prices, which stood at $2 a bushel.

The soybean crop is forecast to fall slightly, but the prices are still expected to drop. Wheat production is predicted to be slightly higher, also causing prices to dip a little.

Falling prices could deliver a dose of relief to farmers who rely on corn and soybeans for feed. High prices for grains have almost eliminated profits for chicken and beef companies this year.

It hasn’t been the best of times for commodity ETFs these last few weeks, and it has some asking if it’s time to stick a fork in them. One advisor tells investors not to panic, because much of the losses are reflective of a stronger dollar. But even with a strengthening dollar, there could still be room for commodities to resume the uptick.

Some commodity ETFs are off their highs into the double digits. The PowerShares DB Agriculture (DBA) has dropped off by 21.3%, although it’s up 1.4% year-to-date. The fund holds futures in soybeans, wheat, corn and sugar.

Just because commodities are falling here doesn’t mean that it’s the same everywhere, though. In many developing countries, inhabitants are looking for ways to boost their own production and make some money.

Honduras is one country that has taken matters into its own hands and has become a cross-section view of the global food situation, according to Morning Edition on NPR. On the one hand, there are fields of lush and green genetically engineered corn. On the other are low-income families that joke (we hope) that they’ll have to eat one another if they become too hungry.

After farmers endured years of neglect by the government, the country is now trying to reverse the food shortage and feed its people by putting more money into food production.

Agriculture ETFs that could be affected:

• iPath DJ AIG Agriculture Total Return Sub-Index (JJA), down 4.1% year-to-date
• DB Agriculture Double Long (DAG), down 31.6% since April 15 launch
• DB Agriculture Double Short (AGA), up 24% since April 15 launch
• E-TRACS UBS Bloomberg CMCI Food (FUD), down 2.8% since April 4 launch
• ELEMENTS MCLX Grains Index (GRU), down 15.1% since Feb. 15 launch

One casualty of higher food and grain costs are the catfish farmers in the South. They have been unable to keep up with the high cost of corn and soy bean feed and have no choice but to drain their ponds.

Among the reasons corn and soybean prices are so high are harvest shortfalls, demand from the Asian middle class, government mandates for corn to produce ethanol and the flooding in the Midwest, reports David Streitfeld for The New York Times.

Feed has become more than half the total cost for raising catfish, compared to one-third for pork and beef production. Catfish has become vulnerable as the economics went astray and other industries will fall victim as well.

It’s a bonanza for corn and soybean farmers, but not so much for consumers.

ETFs that could get another growth spurt as resources become more scarce:

• PowerShares DB Agriculture (DBA), up 12.4% year-to-date
• iShares GSCI Commodity Index (GSG), up 28.6% year-to-date
• E TRACS UBS Bloomberg CMCI Agriculture (UAG), up 3.4% since April 4 inception