Crude oil has become so closely tied to the global economic outlook that the demand side pressure is seemingly outweighing the supply side premium. That means a strong dollar and weak global demand outlook should push oil prices below $90. Gasoline and heating oil should follow suit while natural gas remains a long-term buy with straight calls to capture upside volatility.

Financials

The stock market has developed a downtrending channel after setting a relative high set back on May 2. This pattern suggests a move to 1307 on the S&P, although I believe the momentum to the downside should increase rapidly and the channel is likely to fail by a more aggressive bear move over the next couple of weeks. The outlook on the global economy is finally starting to catch up with what I have been discussing for months - the recession's bailout-induced pause is over and the global economy is in real trouble. Look past Greece and other European nations. Look beyond the Japanese disaster. Early monetary tightening will make the world cringe, and the reversal in those monetary policies will not only destroy investor confidence but will launch the U.S. dollar back into a bull market. The Fed may not have made all the right moves, but not following the bandwagon by raising rates will likely be viewed as a brilliant contrarian move. Bonds remain bullish amid a stock market decline and flight to quality. The dollar should see choppy price action until we break 80 on the index, afterwhich the long-term bull trend will be reestablished. The pound, euro, Canadian and Aussie dollars are all bear plays. I would not chase the dollar higher, but remain long term bullish. The yen should see some gains with the BoJ holding steady on rates, indicating the post tsunami rate cuts are over and the economy is stabilizing. The Japanese yen remains a buy regardless of the dollar's next move and I continue to standby my forecast that:

The Japanese Yen futures will hit 140 before 80 or I will quit writing the Weekend Commodities Review forever.

Grains

Grains unexpectedly rallied last week amid concerns over continued bad weather in both the main wheat and corn growing regions. Crop progress reports remain critical as we approach the end of planting season for corn. It is possible that grains will receive a temporary boost from funds pulling out of oil that are seeking other commodity investment, but I believe this would be short-lived. Overall I believe supply-side concerns will weasel their way into the picture for one or two-week stints, but the demand side of the equation (think global economy, China, U.S. dollar strength) is where I expect the fate of grains in 2011 to be determined. That is also why this pop should end up being a great hedge point for farmers to grab and for specs to develop short plays for the summer season.

Meats

Cattle is clearly in a freefall and the market appears prime for volatility expansion and intensified selling pressure, the likes of which have not been experienced since the Mad Cow collapse. The cattle on feed will likely only help the liquidation event continue. Hogs also broke recent support and remain a sell.

Metals

Gold and silver have shown signs of support, but the recent action is likely nothing more than congestion after a strong slide. There is a bit of conflict on a fundamental level as panic out of the euro should pressure gold, but the fear of economic slowdown might help support a brief flight to quality into metals, especially factoring in the recent drop giving relative value to this sector. This is expected to be a blip on the screen of a continued plunge in this sector.

Softs

Coffee broke through key support and is setting the stage for a mega collapse in coming weeks. There is nothing fundamental holding this market up if the global demand outlook declines. The cocoa market is similarly set up to fail after sustaining historically high prices for an extended period and now seeing the combination of Ivory Coast exports hitting the world and a global economic panic. Cotton's channeling is likely short-lived and more downside should be expected. OJ's momentum increase off trendline support should be viewed as a potential turning point - meaning the market jumped off trendline and now as it comes back to test that trendline it could have the momentum to breakdown through that support and fail. Sugar's congestion is not entirely unexpected after such a prolonged pullback, but I do believe new lows are fast approaching.

James Mound is the head analyst for www.MoundReport.com, and author of the commodity book 7 Secrets. For a free email subscription to James Mound's Weekend Commodities Review and Trade of the Month, click here.