Atmospheric Rivers Drench California

The West Coast megadrought, described as the worst in 1,200 years, seemed to be abruptly broken. A series of storms swamped California and brought needed relief to some areas. Thousands experienced flooding, overflowing reservoirs, mudslides and power outages. Had the soil there been moist or even only moderately dry before the storms, the rain may have been absorbed, but the soil was parched and almost impervious to moisture. Hurricane-force winds and extreme rainfall repeatedly created flooding, forcing evacuations and leaving a path of destruction and mounting death tolls. Although California recently received a lot of precipitation, much of it is still considered to be in some state of drought.

Cooler Inflation Boosts Bullion and Bonds

The rally in gold and other metals got a lift Thursday when the Department of Labor’s Consumer Price Index (CPI) indicated the rate of U.S. inflation slowed for the sixth-straight month. The core CPI, which excludes food and energy, rose by 5.7 percent. Treasury bond and note futures also gained momentum when the data was released. Most stock indexes rose to two-week highs on the data as well. Gold has risen from a low of $1,610 per ounce in early November to a high of $1,895 on Friday. Aggressive buying by central banks remains one explanation for the rally.

Ag Report Pumps Up Corn and Beans

The USDA’s lower assessment of the production, supply and demand for corn and soybeans lifted prices dramatically Thursday. Last year’s bean production was cut by 70 million bushels — way below expectations. Last year’s corn production was cut by 200 million bushels. Harvested acres were cut for both crops as well.

The reductions came mostly from the drought-stricken states of Kansas, Nebraska and Texas. Wheat-ending stocks were adjusted upward as a result of lower feed usage and the USDA’s steadying of Russian wheat production. The Kremlin’s military appointments and fears of further offenses could keep the wheat supply in jeopardy and prices volatile. China’s economic recovery continues to be threatened by a surge in Covid infections, and will continue to affect the demand side of the price formula.

Weekly Winners and Losers

This weeks winners were February gold, up nearly $50 at $1,924 per ounce midday Friday, with Feb crude oil up $5 per barrel at $79.90. March soybeans jumped 50 cents up to $15.30 per bushel.

Hogs lost over four cents per pound, trading at 78 cents.

March corn brought $6.76 per bushel, with wheat going for $7.44. Silver for March delivery traded at $24.42 per ounce.