United States Natural Gas (NYSEArca: UNG) rolled its October contracts and bought November contracts on Sept. 14. The roll will wrap up today, reports Asjylyn Loder for Bloomberg. John Hyland, chief investment officer for the fund, said that the speculators had “only a random chance of being right.”

Meanwhile, it was widely expected that the Commodity Futures Trading Commission (CFTC) would move in on the energy sector first, but the CFTC revoked position limit exemptions in wheat and corn for two Deutsche Bank AG PowerShares commodity funds: PowerShares DB Commodity Index Tracking (NYSEArca: DBC) and PowerShares DB Agriculture (NYSEArca: DBA), effective at the end of October, writes Nevil C. Speer for Cattle Network.

As these new regulations are discussed, many wonder what the implications could ultimately be.

Commodity related ETFs are usually “long-only” positions that focus on the buy side in the market. It is the long position that has many believing these types ETFs are helping to artificially drive up market prices. Others argue that market prices have little to do with ETFs but with fundamentals – supply and demand are seen as the real drivers of commodity prices.

If the CFTC begins regulating the industry, some believe that restrictions added could divert funds to less regulated exchanges and cause hedging business overseas to move to other markets with different regulations. In the meantime, other funds may limit issuance of new shares in the coming months, which would reduce liquidity in the markets.

The regulations imposed by the CFTC could eventually distort prices in the markets and risk management could become more difficult to handle.

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.

Crop scientists fear the Ug99 fungus could wipe out more than 80% of worldwide wheat crops as it spreads from eastern Africa. It’s the number one threat to the world’s most widely grown crop.

Word is that the fungus has already traveled the Red Sea, and experts are saying that Northern India and Pakistan are next. Karen Kaplan for The Los Angeles Times reports that the wind will transfer it to China and Russia, and eventually North America, unless it travels by human first.

Fear that the fungus will cause widespread damage has caused short-term price spikes on world wheat markets. Although famine has been avoided, it is still a possibility in the long run. The major goal is to create a new wheat variety that is immune to Ug99. Estimates are that 19% of the world’s crop is already in danger.

These fears aren’t just idle ones. There have been very damaging past outbreaks. The so-called Stem rust destroyed more than 20% of U.S. wheat crops several times between 1917 and 1935, and losses reached nearly 9% twice in the 1950s. The last major outbreak was seen in 1962, which took out 5.2% of U.S. crops.

• PowerShares DB Agriculture (DBA): up 0.80% year-to-date; holds 25% wheat

• ELEMENTS MLCX Grains Index ETN (GRU): down 0.5% year-to-date

For more stories on agricultural commodities, visit our agriculture category.

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

They plunged by the most since March, as grain futures fell, while rain from Colorado to Pennsylvania brought fresh hopes for crops, reports Millie Munshi for Bloomberg. Corn, wheat, soybeans and cotton all fell by the maximum amount allowed by U.S. exchanges.

Those numbers follow a record month for June, in which corn rose 26% and soybeans rose 15%. Copper, cocoa, gold, silver and coffee also fell as worries about supply tapered off

What does it mean? Is this a bump in the road, or the start of a downtrend? We’ll have to wait and see on that one, but always be sure to have your exit strategy handy, no matter what happens.

• PowerShares DB Agriculture (DBA), up 21.3% year-to-date
• iShares COMEX Gold Trust (IAU), up 10.8% year-to-date
• iPath Dow Jones-AIG Cocoa Total Return Sub-Index (NIB), launched June 24
• UBS E-TRACS CMCI Food (FUD), launched April 4

For full disclosure, some of Tom Lydon’s clients own shares of DBA.

But…chocolate? Precious, precious chocolate that many of us consume by the pound?

Yes, indeed. The world’s cocoa supply is threatened, reports Scott Jagow for Marketplace. Now, let’s everybody stay calm – there’s no reason to run to your local Sweet Shoppe and hoard the chocolate goods yet, unless you’ve got a craving that just can’t be denied.

That’s because government scientists and the candy industry are hard at work to make sure that you still get your M&Ms fix, since they might be the only thing keeping you from chewing your nails off as the price at the gas pump ticks higher and higher.

The cocoa tree is facing disease and drought, and lost crops have cost farmers about $700 million a year. Falling supply has doubled bean prices in many places.

The government to the rescue: scientists are sequencing the cocoa bean genome to produce more disease-resistant varieties of cacao. Mars Inc. will contribute $10 million to fund the project.

The newly-launched iPath Dow Jones-AIG Cocoa Total Return Sub-Index (NIB) is one way to capture the rise in cocoa prices, especially if drought and disease continue to be a factor.

Blame the rising cost of energy and commodities, which is continuing to have a ripple effect that’s leaving nothing untouched. The earnings per share were 20 cents lower than analysts had been expecting, reports Brad Dorfman for Reuters.

At least if misery loves company, General Mills has lots of it. While wheat, corn, oil and gas become more expensive, it isn’t just hitting the big-name brands – everyone is trying to find ways to cope:

• Kellogg (K) is shrinking the size of its packages sold in the United States, after having raised prices in January, reports the Canadian Press.
• Chiquita Brands (CQB) saw their shares lost more than 25% of their value after the company said it would report "significant losses" in the third quarter, says Matt Adrejczak for MarketWatch.

General Mills, for its part, has raised prices and found other ways to cut costs. For fiscal 2009, the company expects sales to grow at a mid-single-digit rate.

Relief shouldn’t be expected anytime soon, since the head of the United Nation’s food agency has warned that prices aren’t going to come down, the Associated Press says. Part of his solution involves increasing production.

General Mills is one of the top components of the PowerShares Dynamic Food & Beverage (PBJ) fund, with 5.3% of the holdings. Kellogg is 4.8% of the fund, and Chiquita is 3.1%. It’s down 6.9% year-to-date.

Billy Fisher for the Street sorts out the three to watch for 2008, Part Two:

1) The Federal Reserve has said it will keep interest rates stagnant
for now in an effort to keep the economy in recovery mode. But analysts
expect rising rates later in the year to help boost the value of the
U.S. dollar.

For today, the dollar finished lower after another round of weak U.S. economic data was released, report Myra P.Saefong and Nick Godt for MarketWatch.

An ETF to capitalize if the greenback turns it around? PowerShares DB US Dollar Index Bullish (UUP), which is down 3.7% year-to-date.

The dollar against the euro and the Japanese yen:

2) On the housing front, sales are still down, and inventory is
rising, all the while home prices continue to fall. For the first
quarter of this year, they were down 14.1%.

Lowered prices are causing buyers to come out of the woodwork, as
bargain hunters have sent home sales up 6.3% in April from March. In
bad news, housing starts fell to their 1991 lows, down 3.3% in May, Patrick Rucker for Reuters reports.
There have been mixed signals about the health of the sector across the
country: in the Northeast, for example, housing starts jumped 61.5%.
But starts in the Midwest were down 25%.

When the housing market is once again on solid footing, some of the funds investors can use to take part: SPDR S&P Homebuilders (XHB) and DJ Wilshire REIT (RWR). The funds are respectively down 9.4% and 2.2% year-to-date.

3) China may be full of surprises for the last part of 2008, as they are still a growing nation despite recent hiccups.

Deutsche Bank’s economist raised his 2008 and 2009 GDP forecasts to
0.7% and 0.4%, respectively. Moreover, the recent quake should deliver
a boost as reconstruction begins.

As for the Olympics, plenty of countries have suffered a post-Olympics hangover, but that’s not likely in China, say Alan Wheatley and Chris Buckley for Reuters.
That’s because Beijing accounts for just 3.7% of Chinese GDP, and
Olympics-related capital spending was only 1% of nationwide investment
from 2003-2007.

Funds to watch if China mounts a firm turnaround in the second half of this year: iShares FTSE/Xinhua China 25 (FXI) and SPDR S&P China (GXC), which are down 20.4% and 23.3% year-to-date, respectively.

If you’re hungry, the flooding in the Midwest is probably just making a bad situation worse. But if you’re holding an ETF that tracks futures, such as the PowerShares DB Agriculture (DBA), you’re loving the continued hot streak. Year-to-date, the fund is up 23.2%.

Corn futures have hit yet another record, rising 3% after flooding wreaked havoc across the Midwest, Miyoung Kim for Reuters reports. Much of the world’s food is grown there, and now is not a particularly good time for torrential rains and flooding, as we’re already in the midst of a global food crisis.

The U.S. Department of Agriculture has already chopped 5 bushels per acre of this year’s corn production.

We suggest you start thinking about alternative side dishes when you’re grilling out this summer.

On the other side of the world, Australia’s main eastern agricultural state of New South Wales is now 60% in drought, says Michael Byrnes for Reuters. The estimated wheat crop has been slashed as a result.

• PowerShares DB Agriculture (DBA): holds futures for corn, wheat, soybeans and sugar
• ELEMENTS Rogers International Commodity Agriculture ETN (RJA): up 10.4% year-to-date; seeks to replicate an index of agricultural commodity futures contracts, including soybeans, corn, oats, rice and wheat.
• E-TRACS UBS Bloomberg CMCI Agriculture Index ETN (UAG): up 8.7% since April 4 inception; seeks to replicate an index that represents the value of a range of agricultural commodity futures contracts, among them wheat, corn and soybeans.

In another commodities news, oil keeps on chugging past new highs. Today, it’s within spitting distance of $140 a barrel, John Wilen for the Associated Press reports. That’s despite Saudi Arabia’s recent promise that it was going to step up production.

Gas also hit a new record, up to $4.08 a gallon.

Naturally, oil and gas ETFs are responding well to these developments:

• United States Oil (USO): up 44.1% year-to-date
• United States Gasoline (UGA): up 29.4% since Feb. 28 inception
• PowerShares DB Oil (DBO): up 45.7% year-to-date