Corn sails higher

Rumors emerged again this week that China may be purchasing more of America's limited corn supply. On Friday morning, the USDA announced a surprise sale of 1.25 million metric tons of corn, the sixth-largest sale on record. Although the buyer of the $350 million worth of corn is unknown, many market participants believe the grain will be headed to China, the world's second-largest consumer of corn.

The USDA is currently projecting that there will be only 675 million bushels of corn left in the United States before the next harvest this fall. This figure amounts to approximately 18 days' use, which is a historically tight supply in the U.S. grain market. If demand from China or other countries increases and further reduces U.S. corn supplies, some analysts believe that corn prices could push much higher.

As farmers prepare to plant their next crop of corn and soybeans across the Midwest, many are worried about recent snowfall in Northern states like Minnesota and the Dakotas. When this snow melts, it could increase flood risks in states downstream, especially Iowa and Illinois, the top two corn-producing states. Flooding can delay or even prevent corn planting and can wash away valuable fertilizers that farmers have already spread on their fields.

As of midday Friday, corn for May delivery was trading at $6.98 per bushel, up 15 cents (+2.1%) on the week.

Gas rises

Natural gas prices continued to float higher this week, reaching $4.39 per million BTUs on Thursday morning. The natural gas market has been lifted in the last two weeks by strong heating demand in Northern states and increasing focus on natural gas as an alternative to other energy sources like petroleum and nuclear power. Although natural gas supplies are still relatively large in the United States, there have been signs of increasing use that could cut into the once-record supplies. As of midday Friday, April natural gas was trading near $4.30, up 11 cents (+2.6%) this week.

Gold hot, silver white hot

Silver and gold pushed into 30-year highs this week. Anxiety over NATO intervention in Libya, a plunging US Dollar, and concerns that that prolonged Federal Reserve stimulus measures will result in unanticipated inflation fueled this week's rally.

Silver prices have exploded $10 per ounce, or 38% in the last 2 months alone. Gold prices have risen more slowly, increasing by $115 per ounce, or 9% since February. Silver, often viewed as "poor man's gold", has enjoyed both its reputation as a hedge against inflation and its role as a raw material crucial to production of a wide range of products including electrical contacts, batteries, mirrors, and circuits. On Friday, May silver futures were trading at $37 per ounce and April gold was near $1430 per ounce.

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.