Drought Worsens in the Plains
Those outside of the winter wheat growing region may not be thinking about the recent US drought this time of year, but precipitation is desperately needed in order to re-charge the aquifer and replenish subsoil moisture in Kansas, Nebraska, and North Texas. This region is just west of the states that suffered from the worst dryness in recent history in the Corn Belt this past growing season.
The latest version of the Palmer Drought Index shows much of Kansas and Nebraska suffering from extreme drought conditions with more than a nine-inch precipitation deficit. This area of North America produces hard red winter wheat used primarily for flour for breads.
Metals Blast Higher on Mid-East Unrest
Thousands of protestors rallied on Friday in Cairo, Egypt to protest Egyptian President Mohammed Mursi's new declaration that presidential verdicts cannot be repealed by anyone. This new power play has shaken the newly formed democracy in Egypt and has made many Egyptian's feel that there is little difference between Mursi's new government and the government led by former Egyptian Leader Hosni Mubarak. Also, just two days after the agreed upon cease fire between Hamas and Israel in the Gaza Strip, new violence has erupted between the two adversaries.
Since gold is perceived to be a safe haven asset amongst investors, gold jumped $23 per troy ounce as of midday Friday. The uptick in violence and political uncertainties associated with Egypt and the Gaza Strip may have been the catalysts that sent gold higher. A weak US dollar and strong Euro currency further charged the buying of the yellow metal. Silver, copper and platinum joined gold in the thrust higher.
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