Corn prices were firm this week, with the July contract climbing ten cents per bushel on Friday. The biggest driver of corn's strength was news that China had purchased 118,000 metric tons of U.S. corn. The Chinese have been buying foreign grain recently to keep domestic prices low and to ward off the potential for a shortage.
China is now the world's largest consumer of grains and meat, a trend that could continue to strengthen as the Chinese population grows and adopts a more protein-rich diet. Some analysts believe that Chinese demand for American corn could push prices significantly higher this season, outweighing the potential for a large harvest.
Corn prices have recently been battered down near six-month lows, allowing speculators to take advantage of what they view as "bargain" prices. As of Friday midday, July corn was trading near $3.70/bu and December corn was at $3.85, each up 2% on the week.
Foreign Currencies Swing
Germany's approval of a $922 billion dollar rescue plan to bail out debt-hit euro zone countries was said to be responsible for a bounce in the Euro currency. On Friday, the Euro was trading at $1.255, up almost 2% on the week. This came after trading as low as $1.214 on Wednesday, a 4-year low.
Many traders shed their Australian and Canadian dollar positions, fearing that a less-hearty global economic recovery may cause less demand for commodities. Often called "the commodity currencies", the Australian dollar fell 6.2% and the Canadian dollar fell 2.1% on the week. The Japanese yen continued its role as a safe haven for investors, gaining 2.5% on the week.
Crude Slips to New Low
Crude oil continued its precipitous decline this week, falling to $69.00 per barrel on Friday morning. Crude dropped along with the stock markets, silver and copper, which all sold off this week as hopes for a strong global economy grew dim. Crude oil's price often tracks general economic outlooks as petroleum is the fuel that drives the global economy, powering vehicles and providing feedstock for chemicals from asphalt to plastics. As of Friday midday, crude oil for July delivery was trading at $70.25 per barrel, down 7% on the week.