Gold Bugs are Buying

Gold prices exploded to a three-month high on Friday, pushing over $1160 per ounce.

Gold has been climbing as US Federal Reserve members signaled that interest rates are likely to stay low for a while. Higher interest rates can dampen demand for precious metals, but rates at their current level could encourage buyers.

The rally in precious metals has been especially impressive since it has been unique when compared to all other commodities and the stock market, which have been falling.

Gold investors are becoming quickly convinced that inflation, the sleeping giant, is waking up. They were further emboldened by a US government report Friday that showed US wages climbing more than expected.

Cotton Market gets Soft

Cotton prices fell Friday below 60 cents per pound for the first time since November. The cotton market has been languishing under 70 cents for almost two years, disappointing farmers and investors.

Analysts expect prices to be under pressure in the coming year as US producers are expected to increase cotton acreage this year. The US is the world's largest exporter and third-largest grower of cotton, making our acreage decisions important worldwide.

Meanwhile, China, the world's largest grower and user of cotton, is sitting on a massive stockpile of cotton, as are many other countries around the world. In total, global stockpiles of cotton stand near 50 billion pounds, enough cotton to make 17 t-shirts for every person on earth!

As consumers use more alternative fibers, like polyester, rayon, flax, and hemp, it appears that the cotton market will need a fundamental shift in the supply/demand picture to boost prices.

Soy Oil Sails Higher

Soybean oil has catapulted higher in recent weeks, outpacing other agricultural markets. While wheat, corn, and soybeans have been quiet, soybean oil has sizzled higher by nearly 10% in the last few weeks.

Soy oil is gaining ground as its primary cooking rival, palm oil, is exploding in price. Palm oil is standing near a two-year high due to a strong El Niño damaging the palm oil crop in Indonesia and Malaysia. Palm oil is the main cooking oil used in Southeast Asia and is widely used in processed foods worldwide. High palm oil prices have prompted cooks to use cheaper soybean oil, increasing demand for the US product.

As of midday Friday, March soybean oil was worth 31.5 cents per pound.