Food Crops Up as Crude Drops

Grain prices returned to their upward track this week, with corn prices leading the way higher. Despite a record-breaking yield for U.S. corn this year (165 bushels/acre), the amount of corn in storage represents only 9.7% of one year's use. This figure, known as "stocks to usage" has been under 10% only two other times in the last 40 years and has many traders eager to buy corn. In the last three days, corn prices have risen 20 cents per bushel, a 5% rise.

Wheat, rice, and soybeans have followed corn this week as global weather concerns continue to fuel the grain rally. Flooding in Pakistan is threatening their rice and wheat crops while hot weather in the U.S. could potentially stress soybeans and corn. Worst of all, drought conditions in Russia have gotten so extreme that wildfires have broken out across the country, decreasing agricultural output even further.

As the markets assess the potential for another global grain shortage, prices have risen, with December corn trading Friday at $4.27 per bushel, November soybeans at $10.39/bu and September wheat at $7.08/bu.

Petroleum Prices Plummet

Since last Friday, crude oil prices have slipped over $7.50 per barrel, a 9% decline in value. This price decline has been welcomed by drivers, as gasoline and diesel fuel futures have also dropped significantly, saving consumers nearly 20 cents per gallon at the pump. The petroleum markets weakened as traders grew concerned over the high inventory of fuels, a falling stock market, and relatively stable weather in the Gulf of Mexico.

Gold Grinds Higher

After reaching a 14-week low at the end of July, the gold market has worked steadily higher, climbing to $1216 per ounce on Friday morning. Investors around the world bought the yellow metal as a defensive measure against paper assets like stocks and foreign currencies, pushing prices 5% higher over the last three weeks. Buying has been especially strong from Asian nations like India and China, the world's largest consumers of gold.