Greece, a small debt-ridden nation bathed by the Mediterranean Sea, continues to sink the currency of Europe. A May 6th election failed to produce a sufficient majority to move forward with recent austerity measures demanded by the European Central Bank. Fearing that the potential election of the anti-austerity party could result in a massive Greek default and expulsion from the Eurozone, investors continued to divest themselves of the Euro.
Falling as much as two cents against the U.S. dollar, the June Euro futures contract scraped 5-month lows this week. Although on Thursday the biggest wave of selling had subsided, news of a Spanish bank downgrade continued to keep the market waterlogged. As of Friday morning, the June Euro futures contract was trading at $1.273, down 1.87 cents on the week.
Gas Rises on Lower Rig Counts
Natural gas prices, depressed by a warm winter and a huge overhang of supply from the newly-developed fracking process, may finally be showing signs of a bottom. Record high storage levels have left many drillers with no place to put the gas, and forced prices below the cost of production. Reports show as much as a 35% decline in the amount of drilling rigs compared to last October's peak. Low prices have, in turn, stimulated electric utilities to switch to natural gas for power generation from more expensive coal and liquid petroleum fuels. Prices rose to a seven-week high on Friday on expectations that increased demand would continue to reduce inventories.
Wheat Rallies on Dry Weather
Wheat prices shot up a dollar this week on fears that drought could hurt yields in several major wheat growing areas in the U.S. plains, Australia, the Ukraine, and Northern China. For the past year and half, wheat prices have been weak versus other U.S. crops, as the world supply of wheat has been adequate, while supplies of soybeans and corn have been extremely tight.
Wheat prices have lagged behind corn for most of the last 12 months, with wheat for July delivery 10 cents per bushel under corn as recently as May 8th. Wheat's explosive price action moved it to a premium of 50 cents over corn, as feed mills, investors, and bakers all raced to obtain supplies before prices went up even more.
The price for July delivery Chicago soft red winter wheat, used for baking pastries, hit $6.86/bu, up almost $1.00 from Monday's low. Kansas City July wheat, used for baking breads, rang the bell at $7.00/bu, a new high since April 1.