It seems nostalgic when we talk about $5 corn. Last year, we all wondered if we would see prices jump over that threshold. Today, we wonder if corn will fall back under that same price.

As strange as it seems, new-crop (December) corn hasn't traded below $5 since Feb. 12. Since that time, tight supplies, poor planting weather and flooding have conspired to keep prices high, touching a high of $7.79 at the end of June.

As if by some miracle, the poor conditions that we saw throughout the spring changed suddenly as we entered July. Weather conditions in the Corn Belt were perfect throughout much of the month, causing fears about poor yields to be substantially lessened.

This week was no exception. Long-range forecasts continue to call for moderate temperatures throughout much of the Midwest, with some rain thrown in for good measure. Corn prices continued to fall as a result. Through Wednesday's close, corn prices were down five consecutive trading sessions to close near $5.27.

In just the first three days of this week, corn was off by nearly 7 percent. With all of the long-range forecasts calling for more of the same, corn is in need of some other bullish catalyst to prevent it from falling back below $5 for the first time in six months.

In addition to the weather, corn traders also watched a decision on ethanol which came out from the Environmental Protection Agency on Thursday. Several months ago, Texas Gov. Rick Perry petitioned the EPA to reduce the amount of ethanol that must be blended into the U.S. fuel supply.

The 2007 energy law passed by congress called for 9 billion gallons of ethanol to be used this year. Perry wanted that total rolled back to 4.5 billion on the premise that the mandate is harming the economic stability of both his state (a huge cattle producer) and the nation by driving up prices for almost all foods. The EPA's decision made Thursday was bullish to corn and the rest of the grains because it insured demand for ethanol.

Looking to other commodities, we continue to see more of the same -- selling.

Six months ago, bearish news was neutral, no news was bullish and bullish news was very bullish. Today, it's just the opposite. A massive liquidation of commodity positions by individuals, mutual funds, pensions, hedge funds and other institutional investors has left a void of buyers for many commodities.

Most blame a declining view on economic growth in the U.S. and abroad. Whatever the reason, bullish news is now neutral, no news is bearish and bearish news is very bearish. One need look no farther than the energy markets for confirmation.

For the past two weeks, gasoline demand has picked up while gasoline inventories have shown big surprise drops. The news should have been seen as bullish or neutral at the very worst. Initially, gasoline did spike higher, but the buying had no legs and sellers quickly swooped in. This week, traders continued to sell and pushed the September gasoline contract to its lowest level in three months.

With retail gasoline prices now approaching $3.50 in many areas from more than $4 just a few weeks ago, many analysts are going to be paying close attention to weekly demand numbers to see if the recent demand destruction was permanent or only temporary. If demand returns to normal levels as prices drop, it would certainly be seen as bullish. However, if demand continues to stay far below year-ago levels, the bearish sentiment should continue.

Walt Breitinger is vice president of commodities at Wachovia Securities. He can be reached at (219) 738-6460.