After being battered for weeks, the corn market surged to one-month highs on Thursday. Corn prices jumped 18 cents in three days on news that China had made its first significant corn purchase in over 10 years. China had been a net exporter of the grain but recently has had weather problems, forcing that country to buy corn on the international market. During the recent rally, "bullish" traders have been tempered by high inventories and the prospect of another record U.S. crop, which has kept corn prices well below last winter's high near $4.25 per bushel.
Despite these "bearish" supply factors, some analysts warn that we could see significantly higher corn prices in the coming months if we don't have the ideal growing conditions that farmers have enjoyed for the last two years. Higher corn prices could "spill over" into other markets, causing livestock prices to rise because of higher feed costs and fuel prices to rise as ethanol production becomes more expensive. As of midday Friday, July corn was trading at $3.74.
Gold rose to a seven-month high at $1182 per ounce on Friday morning as investors fled away from paper assets. The recent concerns surrounding Goldman Sachs and the European debt crisis have many people seeking a "safe-haven" for their money, removed from the uncertainties of the creditworthiness of corporations and governments. Silver has benefitted from the recent insecurity as well, climbing to three-month highs at $18.79 per ounce.
Gasoline prices climbed another 3 cents per gallon this week as outlook for global demand improved. Notably, General Motors recently reported record auto sales in developing nations, including Brazil, China and India.
Analysts warn that increased demand could cause the gasoline market to continue rallying towards 2008 prices, stinging consumers who have gotten accustomed to relatively low gasoline prices. Since February, prices have blown up 50 cents per gallon, a 27% increase.