July 25, 2008

US commodities tumble on stronger US dollar and stocks

Prices of key US commodities have plummeted, with corn falling 26 percent, soy 15 percent and wheat 8 percent since the start of this month -- a consequence of sinking crude oil prices, a stronger US dollar and a collective shift to stock-buying.

Corn futures are now at US$5.91 a bushel, down 26 percent from its peak of US$7.99 in June.

Soy futures fell 15 percent to US$13.84 a bushel, from its record price of US$16.37 on July 3.

Wheat lost 13.25 cents this month, or 8 percent, to settle at US$7.8325 a bushel.

This is a turnaround from a month ago, where floods in the Midwest wiped out corn and soy fields and sent prices to unprecedented highs. However, current good weather in addition to dropping oil prices has brought commodities down.

Mr Michael Smith, president of T&K Futures & Options, said the gaining US dollar and diminishing concern over inflation led to commodities losing appeal as alternative investments, with traders opting to shift money to stocks instead.