Commodity Update -March 23rd

We saw a big drop in commodity prices last week as the US Dollar regained some strength after the Fed lowered interest rates on Tuesday. Some of the price drops were also a reflection of profit taking after the recent big run up in prices (click chart to enlarge).

Grains

Wheat prices fell along with most other commodities. Corn and Soybeans also continued to pull back and are now trading near the mid January lows. We get the crop acreage planting report later this month (31st).

Softs

Sugar has been selling off since the beginning of the month. Likewise for Cotton and Coffee.

Energy

Oil spiked to $110 then pulled back to around $101, while Natural Gas also had a sharp pullback. Heating Oil had a small pullback this past week.

Metals

Gold spiked over $1020 then we saw a huge pullback in just two trading days last week. We also saw a pullback in Silver, Copper, and Aluminum.

Bonds

The 10 yr Note and the 30 yr Bond continue to rise, reflecting a flight to quality from the stock market. Meanwhile the 3 month Treasury yield dropped to almost zero (a 50 year low), also reflecting a flight to quality.

Currencies

The Euro pulled back sharply after the Fed interest rate cut. It previously hit an all time high of almost $1.59 to the US Dollar. The British Pound continued to fall from it's recent high of $2.04, closing the week around $1.98. Starting on March 16th we got the bounce in the Yen (inverse chart) that I predicted in the last post -we'll see how far it goes, and if the stock market follows it up. The US Dollar finally recovered a bit after the Fed rate cut.

Stocks displayed extreme volatility this past week. See my Stock Market Blog for more details.

Note: Charts are 'live' so comments above refer to the appropriate time on the chart.

News Stories:
A Global Need for Grain That Farms Can’t Fill
Soybeans, Corn Fall After Brazil Crop Forecast; Wheat Declines
High Wheat Prices Raise Grocery Costs
Oil Drops on Worries About Weaker Demand
Volatility continues in commodities

March 8th Update

This week we saw most of the food commodities pull back sharply, while the energy complex and the metals continued to move up. Looks like the hedge funds decided to sell and take some profits in the food commodities! I think we will eventually see more upside in wheat prices though.

Grains

Wheat prices are holding near the $11 level after pulling back from their high. Corn pulled back a bit while Soybeans lost a lot of ground. We get another monthly crop report next week.

Softs

Sugar lost a lot of ground as well. Cotton and Coffee spiked up then pulled back like most of the others.

Energy

Oil crossed over $106 this week, Natural Gas hit $10, and Heating Oil continued to rise.

Metals

Gold continues to hit new highs as the US Dollar weakens -we could see $1000 soon, then maybe a pullback. We also saw a rise in Silver, Copper, and Aluminum.

Bonds

The 10 yr Note rose this week, maybe reflecting a flight to quality as the stock market retreated, however the 30 yr Bond pulled back -it's been a crazy market!

Currencies

The Euro continued to go higher this week, surpassing $1.54.
The Yen broke down (inverse chart), correlating with the decline in the US stock market. I expect a bounce in the Yen and the equity markets soon.
The US Dollar continued to fall to multi-decade lows.

Stocks fell again this week. See my Stock Market Blog for more details.

Note: Charts are 'live' so comments above refer to the appropriate time on the chart.

News Stories:
Rising costs move down the food chain
Wheat shortage gets bakers right in the bread basket
Grains join ranks of high-stakes futures gambles
Soybeans, Corn Fall After Brazil Crop Forecast; Wheat Declines