Commodities Up, Dollar Down

Investors worldwide dumped the U.S. dollar and bought virtually all groups of commodities at week's end. Crude oil, gasoline, feeder cattle, gold, silver, copper, coffee and orange juice were especially strong as traders hoped that a resolution could be reached at upcoming European summits. Global markets have been increasingly jittery as debt woes worsen within the European Union, but there is hope that Germany, France and the rest of the European Union can shore up the debt crisis by the end of a summit next week.

Crude oil, which fell to nearly $84 per barrel on Thursday, reversed the most dramatically of all commodities, pushing $89 per barrel on Friday morning.

Grains Gain

Speculators also rushed into the grain markets, emboldened by the falling value of the U.S. dollar. A weak dollar makes U.S. exports cheaper for our foreign customers, boosting sales of corn, wheat, and soybeans to nations like China, Japan, Egypt and Mexico.

In addition to a boost from a falling U.S. dollar, corn and bean prices may have benefitted this week from other bullish factors. Muddy fields, threat of frost, and low supplies could combine to make grains more attractive to investors in the coming months. 50% of the U.S. corn crop and 25% of the U.S. bean crop have yet to be harvested. Cold, rainy weather this week across the Corn Belt could hamper harvest activities.

Many years, investors choose to buy corn at harvest time, when supplies are large and prices are low. They often expect that prices will work higher after the October harvest supply glut eases as corn is consumed throughout the winter for livestock feed and ethanol production. Since the U.S. is the world's largest producer of corn, global prices often move higher once the U.S. harvest is over.

As of Friday morning, corn for December delivery was trading at $6.50 per bushel while soybeans for November delivery were trading at $12.23 per bushel.