Back to the Futures: Soybeans lower, crude and gold go higher

Published: January 24 2014 | 1:00 pm - Updated: 29 March 2014 | 2:37 am in

[Editor's note: Every Friday visit the Business 380 for "Back to the Futures," a quick discussion of the week's grain, livestock, gasoline prices and other topics.]

Soybeans sucked lower

South American farmers are preparing to harvest their soybean crop, a factor which is pulling prices around the world lower. Brazil and Argentina produce nearly half of all soybeans worldwide, and the influx of their beans can have a wide-reaching impact. Most recently, it has been rumored that Chinese soybean buyers are cancelling contracts to buy US beans, choosing instead to buy less-expensive Brazilian beans. Expectations that more demand will be shifted to South America in the coming months caused a sell-off in the US markets, pulling prices down by as much as fifty cents per bushel this week.

By Friday morning, prices declined to $12.64, near the lowest price so far this year. In the coming weeks, the market will continue to watch South American harvest weather and Chinese demand for fresh news that could shake the soybean market.

Cold snap shoots crude higher

Crude oil rallied this week on continued strong demand for heating oil during the cold snap across much of the United States. Made from crude, heating oil is a significant source of heating fuel in the US, especially in the Northeast, where a quarter of homes use the fuel.

There was also fresh news this week that another pipeline has begun alleviating the glut of landlocked crude in Cushing, OK, the central repository for US crude and the benchmark for US prices. As crude oil moves away from the saturated Midwest and into oil-hungry Gulf Coast refineries, that can help demand and raise prices.

Finally, peace talks between the Syrian regime and rebels stalled this week after the parties refused to meet face-to-face, reigniting fears that peace in the Middle Eastern nation was still a lofty goal.

As of midday Friday, crude oil for delivery in March was worth nearly $97 per barrel, near the highest price in three weeks.

Gold sparks higher

Gold rattled to a two-month high on Friday, trading near $1275 for the first time since November. Prices rose sharply after government reports showed rising unemployment in the US and weaker manufacturing data. Economic weakness inspired hope that the Federal Reserve will extend its economic stimulus program, which is generally considered a bullish factor for gold prices.

Meanwhile, a pullback in US stock markets on Thursday and Friday may have also inspired some traders to sell stocks and buy gold which rose $35 per ounce over two days.

Opinions are solely the writer's. Walt Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, KS. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

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