Metals soften, lumber falls

Register
May 17, 2013

Here is this week’s edition of Futures File, our weekly commodities wrap-up:

Soybeans shoot higher

Although US farmers are expecting to harvest a large soybean crop this fall, the current supply of soybeans in storage is running low, lifting prices higher. This week, July soybeans shot up 45 cents (+3.2%), reaching $14.47 per bushel on Friday morning.

Many farmers are holding onto their remaining soybeans, waiting for higher prices before they sell off the rest of last fall’s crop, which is preventing soybeans from reaching end users like food processors, livestock feeders, and biodiesel producers.

The limited US soybean supplies have prompted talk of the United States importing soybeans from South America this summer. Unfortunately, labor unrest in Brazil has been preventing the normal flow of soybeans to foreign markets, further compounding supply shortages worldwide.

Precious metals soften

Gold and silver prices tumbled this week, approaching the low prices they hit in mid-April. Prices have been falling as investors sell off their holdings of the precious metals, preferring to buy stocks, which are at an all-time high. Over the last two weeks, gold has fallen more than $100 per ounce (-7.2%) and silver has sunk $1.75 per troy ounce (-7.3%).

US inflation is currently near zero, which had diminished interest in gold and silver, which are usually perceived as protecting investors from inflation. As of midday Friday, gold for June delivery was worth $1360, and July silver sat at $22.30 per troy ounce.

Timber! Lumber prices fall

Cold, wet weather in the US this spring slowed down construction, diminishing short-term demand for lumber. A report released Thursday showed that housing starts in April were the slowest in five months, which knocked lumber lower. By the end of the week, lumber was trading for only $314 per thousand board feet, the lowest price in over six months.

Prices are also coming under pressure due to expanding lumber mill capacity, which is expected to rise more than 6% this year, increasing supplies. Over the last two months, lumber prices have declined $95, or 23%. Going forward, US construction demand and Chinese economic growth will both play a major role in the lumber market.