This past week saw an assortment of odd stories. Drought in Russia and elsewhere sent wheat prices soaring. Extreme heat in the southern U.S. pushed cotton and cattle prices higher, but failed to support natural gas. Gold had a good week, helped by Wednesday's news that China would allow more of their commercial banks to trade gold internationally.
On Thursday, grains opened sharply higher on news that Russia would ban grain exports, starting on August 15th. Also on Thursday, U.S. jobless claims sent a chill through the markets when they unexpectedly increased to 479,000, the most since April. That was followed on Friday by disappointing job losses in the U.S. and Canada.
Friday's big reversal spike in wheat is no guarantee that the rally is over, but it may be an early sign that buying anxiety is easing. The extent of damage to the world's wheat crop from this year's weather problems is not yet known, but it is not likely that wheat supplies are in any danger of disappearing - at least this year. The USDA's next estimates will be released on August 12th.
A week ago Friday, cotton prices broke higher and that trend continued this week. Early in the week was talk that China's cotton production may suffer from this year's floods. Traders also couldn't help but notice the high temperatures in the southern U.S. states on this week's weather maps. Old-crop cotton stocks monitored by ICE Futures Exchanges were said to be at their lowest on record.
On July 29th, October hogs closed at a new contract high with encouragement from higher prices for wholesale pork. On Thursday of this week however, hog prices fell dramatically and, on Friday, they posted their lowest close in four weeks. It looks like the higher prices shut down packer interest and also came at a time when the U.S. economy had a negative surprise of its own.
For a market that is supposed to be concerned about tight supplies, cocoa prices sure aren't looking very strong. Hmmm. . . it looks like a trading range between $2,900 and $3,150.
Gold prices had a good week, helped by Wednesday's news that China was allowing more of its commercial banks to trade gold internationally. It is also one commodity that doesn't mind a slow U.S. economy - as long as deflation isn't the result. But can it trade above $1,220?
Natural gas prices bounced on both sides of the 50-day average this week while the southern U.S. baked in extreme heat. However, the thermometer held up better than gas prices did. On Thursday, natural gas made a new one-week low and followed through lower on Friday - not a good sign.
Last Friday, a disappointing GDP report. This Friday, a disappointing employment report - not good signs for the economy. So far, the S&P 500 is holding above the 50-day average - is there something else going on or are prices about ready to drop?
On July 20th, the Bank of Canada raised the interest rate to .75%. The Canadian dollar has risen some since then, but it has not been easy. On Friday, the loonie fell after a disappointing jobs report, but there is still hope - prices are still above the 50-day average.
