It’s no secret the commodity markets have been adversely affected by the global financial crisis. Not only has demand plummeted for many commodities, but additional selling pressure has come from massive hedge fund liquidation. Add in a deflationary psychology and a stronger-than-anticipated dollar, and it’s no wonder a host of commodities, from cotton to copper, have registered multiyear low prices this month.

For at least a month now, many of the markets in which we trade have been in choppy, range-bound, sideways patterns. Soybeans are one example of this, with January soybeans trading in a range from 840 to 860 on the support side and 950 to 970 on the resistance side.

As I perused the market quotes for Friday, I saw the markets were almost completely red. There was just one lone green island in a red sea. The world’s stock markets were sharply lower. Oil was sharply lower. The agricultural markets from corn to wheat to cocoa to sugar to coffee were all sharply lower. Cattle, cotton, hogs and oats were also sharply lower. Silver, copper and aluminum followed the pack sharply lower as well.

The talking heads say this is the worst financial crisis since the Great Depression (1929-1932), and I wouldn’t disagree. Will it lead into another Great Depression, or is the market so oversold and fearful now that it’s at--or near--the bottom? Is this a phenomenal opportunity to pick up cheap assets? Or is it more prudent to sell out now to preserve what cash you have left?

I won’t discuss the bailout program in depth in this issue, but I will tell you it makes me sick that we’re collectively bailing out the losing side of a trade for those who made the wrong call. I’ve been through thousands of commodity trades in my career. Wouldn’t it be nice if someone bailed me out of the losers while I got to keep the gains? It’s never happened, and it never will.

Something remarkable occurred in the September soybean futures contract last Friday--the last day of trading for this lightly-traded, widely ignored contract. September beans surged to a one-day record of $2.74 per bushel to end its life at nearly $15 per bushel. In contrast, the active November contract closed an unremarkable 26 cents higher at about $3 per bushel below the final September price.

This has been a year full of volatility and incongruities in the commodity markets. But there’s an upside: I’ve learned to respect both the volatility and incongruities. In fact, all traders can learn quite a bit from what’s transpired over the past few months.

These are the profound words of Mark Twain. Although no two markets are exactly alike, today I’ll examine the phenomenon known as “blood in the streets,” an occurrence that repeats throughout market history. I’m not giving you investment advice here; rather, I’m presenting two specific commodities that are potentially ringing the bell you hear at, or near, the bottom.

First I want to discuss risk. Then I’ll discuss a way to spot the corn price bottom and why corn prices--which collapsed more than $2 per bushel last month--have now fallen into an attractive area.

Oil prices realized their largest weekly drop in history, $145 a barrel down to $129 a barrel. That’s a $16-a-barrel drop. Oil prices are now down $18 a barrel from the July 11 high. Since last Friday, gasoline prices dropped about 40 cents a gallon, and this should show up at the pump in a few weeks.