The U.S. Department of Agriculture (USDA) cut its estimates of last fall's corn and soybean crops.The soybean harvest was revised sharply downward to 3.33 billion bushels from 3.38 billion. Corn inventories are already at a 15 year low, were cut by more than 10% to 745 million bushels, as reported in theWall Street Journal.

Let's look at what happened around the world to the grain harvests:

When we think corn, we think of the United States. True, the U.S. is the largest producer and exporter of corn. But next comes Argentina, the second largest exporter, and what happens in Argentina affects the price of corn worldwide.

There is an unusual heat wave in Argentina. Corn prices are sensitive to weather changes. The heat wave with temperatures above 90 degrees is causing worry over supplies and prices. On Monday, March corn futures jumped 12 cents per bushel to $6.07 per bushel. Today, corn prices are up another 5 cents.

The financial sector has been a strange double-edged sword in portfolios over the past two years or so. In the wake of the Lehman Brothers bankruptcy, billions of wealth was erased in what were long thought of as conservative stocks. Then the resurgence of some banks since the lows of last year made other investors a fortune, with Citigroup (C) and Bank of America (BAC) both soaring about 300% since historic lows on March 9, 2009.

The drama continues in the financial sector even now with the endless see-saw of mortgage default news and the continued worries over sovereign debt in the eurozone. Any investor jumping into financial stocks right now is really taking the tiger by the tail -- but if you do your homework, there a number of opportunities in the sector become clear -- particularly among financials in Latin America.

It is estimated that Argentina's economy shrank by 4.5% last year. Inflation will top 20% this year. Government spending rose 32% in February from a year earlier to $27.3 billion. Spending will keep rising faster than income.

Now mix this cocktail of statistics and you get an economy on the rocks. President Fernandez is tapping $6.6 billion in central bank reserves. His next move is to issue government bonds. Here again Argentina's track record is shaky, having defaulted on sovereign bonds in the past.

What is lithium? It is a soft, silver-white metal that is a good conductor of both heat and electricity. Because of these properties, lithium is used in the manufacture of lithium-ion batteries. Lithium batteries generate 3 volts of electricity, compared to 1.5 volts for lead/acid or zinc cells.

Lithium is used primarily in the manufacture of car batteries for hybrid cars. These cars are becoming more popular, with the major domestic and foreign car makers using lithium batteries. Hence, lithium has become a highly sought-after commodity.

The violent up and down swings in global markets have not subsided. This morning stocks around the world are tumbling. Asian stocks declined as the Nikkei 225 fell 6.8% and the Hang Seng tumbled 6.2%. European markets opened lower with the DJ Euro Stoxx 50 index losing 2.7% and the FTSE 100 index in London down 3%. Dow futures look to open lower by 1%.

There are all sorts of unpleasant surprises popping up around the world. A Japanese electronics company forecast 90% lower profits; Hungary raised interest rates to curb a decline in its currency; Argentina nationalized its pensions to prevent a default. What we are witnessing is the intersection of a highly globalized and interconnected financial architecture blowing up and exposing a global regulatory structure that lags woefully in its ability to measure or repair the problems.

Global leaders are trying to cope with the problem as best they can. Unfortunately, none of them seem to understand fully what is going on. I am taking my view of this to the Wharton Club of Boston tonight -- addressing questions such as: Where are we now? How did we get here? What should people do about it? What should the new financial architecture look like?

One piece of good news in all this is that the dollar has gained 25% since July 15 against the Euro -- that was around the time that oil peaked at $147 a barrel -- it now stands at $69.61.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Just call it 'two steps forward, one step back' for the global trade talks.

The collapse of the World Trade Organization's trade talks this week without an agreement is a setback, economists contacted by BloggingStocks agreed, but it is not likely likely to prevent international trade from growing in 2009.

The nine-day talks in Geneva -- aimed at completing the Doha Round -- collapsed Tuesday after the United States and the European Union could not reach an agreement with China and India on what constituted acceptable tariffs for food imports, The New York Times reported Wednesday. The U.S. and E.U. say China and India wanted to impose prohibitively high tariffs. China and India counter that they were insisting on safeguard rules to protect their food supplies.

Economist Glen Langan told BloggingStocks the elimination of food import tariffs would have resulted in more-efficient deployment of resources, and, ultimately, lower food prices for consumer around the world, along with increased the increased commerce that trade brings. "The failure of the talks is a real loss for consumers in China, India and in the U.S. and Europe," Langan said. "It will also really hurt low cost food producers in Brazil, Argentina, Australia, New Zealand and South Africa. Ultimately, China and India will have to relent, or the west may begin to complain about free trade conditions for manufacturing and services. That manufacturing free trade policy has been the source of a considerable amount of China's and India's economic growth."

Those businesses relying on feed commodities have certainly had to cope with a series of bullish sector trends in the past two years. Increasing demand for food in rapidly growing emerging market countries and the use of corn for ethanol have been the achieve price drivers.

Now, at least for the short-term, add weather concerns. Corn approached a record $8 per bushel Monday as the prospect of more rain on already-soaked Midwest farms increased the likelihood of extensive crop damage, Bloomberg News reported.

Soybeans, wheat, and rice also rose Monday at midday after the National Weather Service predicted that flooding in the Midwest will probably result in "hundreds of millions of dollars" in crop damages. Rice, a staple for about 50% of the world, rose 50 cents to $20.80 per 100 pounds. Soybeans traded up 19 cents to $15.79 per bushel.

Economist Glen Langan, whose specializations include agricultural economics, told BloggingStocks Monday the world needs a strong harvest, across the feed spectrum, from the United States and other nations. "A strong harvest would take some of the price momentum out of corn and wheat, in particular. Unfortunately, we may be headed for a sub-par harvest in the U.S. if current weather patterns persist," Langan said.

Sudden large, negative financial events can disrupt, or at least critique, even the most bedrock economic tenets, let alone recently-percolated conventional wisdom.

On the heels of the housing and credit market crunches, one conventional wisdom item that's currently coming under criticism is the notion of "decoupling" [Subscription required] - the theory that despite a slowing U.S. economy, the European and Asian engines of growth would be sufficient to maintain adequate global GDP growth, The Wall Street Journal reported.

The International Monetary Fund published a chapter in April 2007 entitled "Decoupling the Train," which argued that the U.S.'s mild GDP growth was caused by a housing sector correction. Housing was less global than other commodities, it argued, and hence would not impact the world economy as much.

For example, about two months ago, the IMF projected that global economic growth would slow just slightly in 2008 to 4.8% from 5.2% this year.

Starbucks (NASDAQ: SBUX) is pimpin' on over to Argentina, and it's expanding its operations in Chile. Alsea SAB, which partners with Starbucks to develop the chain in Mexico, will will be tackling those two South American countries together, too.

Starbucks currently has operations in 39 countries, including such diverse and exotic locales as the United Arab Emirates, Malaysia, Bahrain, and Peru. What is interesting about these expansion plans is that Starbucks is widely seen as an extravagance here in the United States. Financial gurus like David Bach even recommend keeping track of your latte factor to control wasteful spending -- a clear ode to Starbucks.

And yet Starbucks is gaining traction in countries far less opulent than our own. According to the CIA's World Factbook, Argentina has a per capita GDP of $15,200, compared to $44,000 here.

While I'm sure that those Argentines will love their coffee, will Starbucks be good for their wallets?