Traverse City Record-Eagle

Archive: Saturday

November 17, 2012

Futures File: Yen yields to pressure

The Japanese Yen plummeted in value this week as news broke that the Japanese Parliament was going to be dissolved.

Prime Minister Yoshihiko Noda called for new elections next month as a result of parliamentary deadlock. It is widely expected that he will lose in the upcoming election, giving Japan its seventh leader in six years. Former Prime Minister Shinzo Abe, of the Liberal Democratic Party, is expected to take over as Japan's political leader.

Mr. Abe has publicly made statements that he intends to adjust Japanese monetary policy to raise inflation levels, a measure that could reduce the value of Japanese currency. On expectations that Mr. Abe would essentially print yen to drive inflation higher, the currency plummeted in value, dropping 2.5 percent during the week. As of midday Friday, one Japanese yen was worth 1.23 cents.

Natural gas nears $4

Natural gas prices climbed higher this week as colder weather increased heating demand across the Midwest and Northeast.

Around 70 percent of homes in the Midwest and more than half in the Northeast use natural gas as the primary heating fuel, which makes the natural gas market reactive to heating demand in those regions. Additionally, an unexpectedly large drawdown in national storage levels last week helped push prices higher. As a result, natural gas for December delivery jumped as high as $3.83 per million British thermal units (MMBtu) this week, nearing the highest price in over a year.

For now, natural gas traders are waiting to see if prices can rise over $4 per MMBtu, a price that has not been seen since September 2011.

Soybeans sink

Soybean prices continued making new lows this week, falling to the lowest level since June. Bean prices are still under pressure from an adequate harvest and better-than-expected growing conditions in South America. Since making a peak near $18 per bushel in September, soybean prices have collapsed 24 percent, with January soybeans worth only $13.72 on Friday.

Opinions are solely the writer's. Walt Breitinger is the president of Breitinger & Sons LLC, a commodity futures brokerage firm 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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