Fireworks Start Early in the Corn Market

When historians look back over the 2010 season, this past Wednesday will stand out as an exceedingly important date for the corn market. It was the day that corn for July delivery exploded 29 cents, or 9%, at $3.54 a bushel on the Chicago Board of Trade.

Corn futures prices, which on Tuesday had plumbed the depths of a nine-month low, leapt after a USDA report showed that corn stockpiles were drastically lower than expected.

Corn for delivery in December was lifted by the same report, which revealed that the number of acres dedicated to corn planting this year came in far below forecasts. December corn concluded the week up 23 cents/bu, or 6.4%.

In terms of cash receipts from sales, corn is this country's number one crop. The government estimates this year's crop will amount to 13.4 billion bushels. Wednesday's price action alone caused the predicted market value for corn for July delivery to increase over $1.2 billion dollars.

Financial Markets Stumble

While the grain markets soared this week, the financial markets staggered to new lows. This week's sell-off was mainly driven by sour economic data across the board. During the week, traders were hit with tepid employment numbers, pessimistic consumer confidence, plummeting home sales and diminishing manufacturing figures. This widespread negativity hammered nearly all of the non-agricultural markets, causing stocks (-4%), copper (-6%), and the U.S. Dollar (-1%) all to tank.

As investors fled industrial commodities, the petroleum markets were hit especially hard. Crude oil slipped 9% this week to $72 a barrel on Friday, while its primary products, heating oil (diesel fuel) and gasoline, sank 11 cents per gallon. The drop in futures prices should translate to cheaper fuel at the pump for most consumers, a welcome relief before the busy holiday weekend.

Gold & Silver Collapse

After briefly approaching its all-time high ($1,265/oz) again on Monday morning, gold dropped sharply as "bulls" lost their confidence. Gold took its biggest hit on Thursday, dropping $39/oz as sellers rushed into the market. By Friday afternoon, gold was trading at $1,210, down 4% on the week. Silver was pulled down even farther, trading Friday at $17.75, down 7%. This week's plunge had many metals investors nervous, but the more courageous viewed the drop as an opportunity to buy the metals on a "dip."