King Corn takes the lead

Corn prices rallied on Thursday, rising 75 cents per bushel by Friday mid-morning, up 11 percent. The move was prompted by a USDA report that showed that the U.S. was eating through its corn stockpiles at a rapid pace. The strong corn prices and limited supply this year have driven farmers to devote more acreage to corn this year, with producers planning to plant 92.2 million acres of corn, the second most in modern American history.

Wheat and soybeans went along for the ride as well, with both markets jumping 40 cents on the USDA report. Soybean planted acreage this year is expected to be lower than last year, indicating that the limited supply of soybeans could get even tighter, with some analysts warning that poor weather could lead to a soybean shortage in the United States.

Corn and soybeans are essential to the U.S. economy, and the potential for shortages is pushing prices sky-high. There continues to be strong demand from the bio-fuel, livestock feeding and export industries, which are competing to buy up the dwindling stockpiles. As of midday Friday, corn for May delivery had risen the exchange-determined limit of 45 cents per day to $7.38 and May soybeans were near $13.95 per bushel.

Japanese yen falters

The Japanese yen fell to a six-month low against the U.S. Dollar this week as investors pulled cash out of Japan in hopes to find higher-yielding investments. Japanese interest rates are at zero percent and are expected to remain low for an extended period as the Japanese government recovers from the recent tragedies. Global investors are diverting funds to nations like Australia and Brazil, which has a short-term interest rate of 4.75 percent and 11.75 percent, respectively. This flow of money has pushed the Australian dollar 7 percent higher over the last two weeks, making it worth more than the U.S. dollar at $1.03.

For the average American, these changes translate to cheaper Japanese imports and more expensive Australian vacations. As of midday Friday, the Japanese yen was worth 1.188 cents.

Opinions are solely the writer's. Alex Breitinger is commodities broker with Breitinger & Sons LLC, a commodity futures brokerage firm in Valparaiso, IN. He can be reached at (800) 411-3888 or indianafutures.com. This is not a solicitation of any order to buy or sell any market.