Every day this week saw the Chicago Board of Trade soybean futures market make new contract highs.

Monday's session started on a positive tone as futures met their near term objective of new contract highs, but light selling surfaced on reports that rain from the previous weekend was beneficial to growing crops.

This is important as market watchers are leery of tight world supply and demand issues. In order to replenish world stocks, Brazil will need to plant more acres in their next planting season and the U.S. will have to harvest as many acres as possible, as every bushel will be necessary to maintain adequate inventory levels.

Monday's session finished down 1 cent at 8.15 on the day. Tuesday saw positive prices for soybeans as new contract highs were seen once again. The higher prices were supported as weather models agreed that above normal temperatures and below normal precipitation will be seen for the rest of the week and well into June.

The July soybeans contract finished up 12 cents at 8.28 for the day. Wednesday saw soybeans consolidate as heavy resistance was seen at the previous contract highs. A lack of fresh fundamental news and overbought conditions were noted as the reason for the weakness.

Wednesday's session finished down 6 cents at 8.22, while Thursday saw bullish tones renewed as market watchers saw temperatures in the Midwest reach well into the nineties. This sent prices to new contract highs again as above average temperatures now will lead to acres lost later this year. Thursday prices settled at 8.32, at up 9 3/4.

OIL: Weather also played an important role in the crude oil futures market this week. Monday saw a rally of more than a $1 as news broke that Cyclone Gonu threatened key Persian Gulf oil suppliers.

Originally estimated to be a category four storm, Cyclone Gonu had market watchers worried about possible disruptions in shipping from Oman and Iran. Tuesday saw prices retreat as Cyclone Gonu weakened and lower gasoline prices weighed on crude oil.

Gasoline was down on expectations of rising refinery output and inventories, and July crude oil finished down 62 cents to $65.59 a barrel. Wednesday crude oil prices traded lower on increased U.S. supplies, but quickly moved higher on the news of Turkish troops moving into Northern Iraq and Cyclone Gonu making land fall.

The Turkish troop movements were later denied, but the fear of further violence in the Mideast led to July crude oil finishing up 37 cents at $65.98. Thursday morning saw lower prices as the Turkish troop story and possible Cyclone Gonu damages were seen as minimal. Crude oil finished the week sharply lower.

The lower prices soon gave way though to a technical rally as a key trend line was violated in the July contract. Crude Oil finished up 90 cents at 66.86 on the day.

TREASURY: Even with an 8.26 percent drop in the Shanghai Composite, the beginning of the week saw little trading activity as the Treasury market used the slow Monday to recoup some of the losses that were seen last week. A more active Tuesday saw prices push lower as the ISM non-manufacturing index showed activity in the service sector had jumped to 59.7 in May, versus April's number showing 56.0.

This was the highest reading of the index in more than a year. Any reading over 50 signals expansion of activity, and market expectations were for the index to be unchanged. Only a triple-digit loss in the Dow Jones Industrial Average was able to keep the 10-year yield from reaching 5 percent, a key psychological level.

Wednesday once again saw slower activity in the markets as the 10-year yield flirted with the 5 percent level early in the session. Profit taking pushed prices higher as the note was able to maintain the 5 percent level. But Thursday was a very active day as unexpected data pushed treasury prices much lower on the day.

Overnight trading saw New Zealand raise their interest rates to an all time high of 8 percent. This appears to be the straw that broke the camel's back as an overly sensitive market took New Zealand's actions as a sign of probable rate hikes by the U.S.

Fed traders already worried about rate hikes coupled with New Zealand's rate hikes led to an enormous sell off in the Treasuries, with the 10-year yield as high as 5.10 percent on Thursday.

Walt Breitinger is vice president of commodities at A.G. Edwards and Sons. He can be reached at (219) 738-6460.