Traverse City Record-Eagle

Business

March 29, 2014

Futures File: Market stops Yellin’ for gold

Janet Yellen, in her first meeting as Chairwoman of the Federal Reserve last week, indicated the Fed would continue to reduce stimulus and could be on track to start raising interest rates in the near future.

In response, gold prices have collapsed, losing over $100 per ounce.

The Federal Reserve, through a series of programs, have lowered short-term interest rates to near zero and have pulled down long term rates as well, making it less expensive to borrow money. While these measures made mortgages and other loans cheaper, it also sparked fears that inflation could accelerate, which helped push gold over $1,900 per ounce in 2011.

Yellen’s most recent announcement was taken as negative for gold, which hammered the metal down to $1,286 on Friday, a six-week low.

Despite the potential bearish influences from the Fed, other gold investors are closely watching the situation in Ukraine. With as many as 50,000 Russian troops poised on the Ukrainian border, some market watchers believe that war could be brewing, which could cause global investors to flock towards the perceived safety of gold.

More beans please, hold the corn

On Monday the US Department of Agriculture is going to release its annual Prospective Plantings report, which will outline expectations for this year’s crop acreage.

During the winter farmers have been watching grain prices along with fuel, seed, and fertilizer costs so they can determine which crops they’ll plant this year. Throughout much of the Midwest, many farmers simply split their acreage between corn and soybeans, but they can adjust acreage to capture greater profits, planting more of the high-margin crop.

Lackluster corn prices and strong demand for soybeans have encouraged some farmers to add as many as 5 million acres of soybeans, while dropping corn planting by nearly 3 million acres from last year. If these intentions hold true, U.S. farmers are going to plant a record-breaking 81 million acres of beans this spring.

On Friday, as the markets were waiting for the USDA’s figures, the new crop December corn was worth $4.88 per bushel, while November beans traded for $11.90.

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. 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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