Wheat at new record as recession fears loom
New York, January 19, 2008
US wheat traded at the Minneapolis exchange touched a new record high near $12 a bushel while oil, copper and gold recovered from the sharp sell-off seen earlier in the week on fears of a US recession.
For the week ahead, analysts said agricultural markets should perform better than energy and metals due to stronger demand envisaged for food against relatively harder times for less-essential commodities.
Still, they cautioned investors against being overly bullish on any market as many were ripe for profit-taking from recent gains.
'We would still tread with caution here as bears are still very much in charge of the script in practically all the markets,' Edward Meir, metals and energy analyst at MF Global in New York, said in a note to investors.
Fears that the US may be unable to avoid a recession in coming months have brought crude oil off this year's record high of $100 a barrel and gold below an all-time peak of $916 an ounce.
Leading commodity indexes reflected the uncertainty in natural resource markets on Friday. The Dow Jones-AIG and the Standard & Poor's GSCI settled up while the Reuters-Jefferies CRB ended down.
Analysts said investors will watch next week for clues on how extensively the Federal Reserve will cut interest rates during its meeting at the end of January.
Any rate cut to help the economy will weaken the dollar, which would tend to boost prices of commodities quoted in the currency.
US spring wheat, prized by millers and bakers for its high protein content, upstaged the more actively traded winter wheats this week.
The March spring wheat contract on the Minneapolis Grain Exchange surged on Friday to $11.94-3/4 per bushel, setting the highest-ever price for any US wheat futures contract for a second straight day.-Reuters