Commodities take a dive on rising US dollar
NEW YORK —
Grains, energy and metals prices tumbled Friday afterward a sharp jump in the dollar once again lessened the appeal of wares as a hedge facing the weakening currency.
The dollar, whose drawn out decline contributed to the roar in commodities prices over the past year, reached its highest period against the euro because that February. Now that other world economies appear to be joining the U.S. plan in a slowdown, the dollar is clawing back and big institutional investors are unloading their commodities holdings.
Those large investors flocked back to funds on Friday - the Dow Jones pertaining average rose more than 300 points, and banks and other financial services companies saw especially hefty gains.
“There’s a money shift going on,” reported Jason Ward, every analyst with Northstar Commodity in Minneapolis, who believes grains prices have before that time seen their peaks for the nearest few years. “You’re considering hedge funds bring forward begone from the commodities sector and toward the financial sector.”
The dollar’s rebound was Friday’s big trigger, Ward said. For farming prices in particular, the rising dollar means that U.S. grain exports to other regions such as China and Europe - which have seen healthy crops of their own - will likely slow down.
Wheat for September delivery dropped 57 cents to settle at $7.6525 a bushel on the Chicago Board of Trade. Corn during December delivery fell 23.75 cents to settle at $5.1825, and November soybeans fell 58.5 cents to end at $11.805 a bushel.
For the week, wheat is down 3.6 percent, indian corn is down 11.4 percent, and soybeans are down 13.5 percent.
Energy prices in addition sank. Light, sweet crude for September delivery fell $4.82 to settle at $115.20 a barrel on the New York Mercantile Exchange, its lowest conclusion as May 1, whereas front-month crude finished at $112.52.
In a research note Friday, Lehman Brothers chief efficacy economist Edward Morse said he believes oil prices have topped out.
“Barring a physical disruption that may temporarily spike prices, we judge that oil prices have peaked for the next few years,” Morse wrote.
Morse pointed to lowered demand growing expectations in a puzzle of the International Energy Agency; slower growth and a shift to efficient vehicles in the United States; and the fact that China has less incentive to stockpile fuel now that the Olympics are starting.
Heating oil futures fell 10.56 cents to finish at $3.1280 a gallon on the Nymex. Gasoline futures level 11.53 cents to close at $2.8874 a gallon.
Original text: http://seattletimes.nwsource.com/html/businesstechnology/2008095992_apcommoditiesreview.html?syndication=rss
