(Reuters) – Gold hit one-month highs on Wednesday in its longest stretch of gains in over two months as investors sought the safety of bullion in the face of an uncertain outcome to a key EU summit and after a…
The U.S. consumer price index rose 0.5% in February from the month before, pushed higher by food and energy costs. The price index for all items climbed 2.1% over the past year.
But many think government-reported inflation numbers don’t present an accurate price picture. Some economists estimate the true rate of inflation is closer to 8% or 9%. And those numbers could rise higher as the U.S. Federal Reserve continues to pump billions of dollars into the financial system.
Inflation, coupled with political turmoil in the Middle East, has pushed many investors out of stocks and into commodities. Gold rose to a record $1,445.70 an ounce on March 7. Market uncertainty from the Japan disaster pushed the metal down to $1,380.70 on March 15, but it gained again this week to hover around $1,400 an ounce.
Global shares rallied for the first time in three days as the Nikkei 225 (NKY) Stock Average rebounded from a slump that sent valuations to a 28-month low and commodities gained. The dollar climbed versus the yen as fires at a Japanese nuclear plant hampered efforts to avert a meltdown.
The world is finally waking up to the fact that global grain prices are destined to head higher – much higher.
Nasty weather in key agricultural markets around the world has savaged the global grain crop, meaning worldwide supplies can’t help but be squeezed. Australia, for instance, is experiencing additional flooding in areas that were already battered by the torrential rains of November, December and January.
And as if the supply-related increase in agricultural commodities wasn’t enough, there’s also the U.S. dollar – and the so-called “race to the bottom” – to contend with. Make no mistake: The endless devaluations in the greenback are having a worldwide impact on agricultural commodity prices. Since commodities are priced in dollars, these devaluations translate into higher prices for grains and other food-related commodities.
Short supplies and rising prices are bad enough, but concerns about these first two realities are creating an additional catalyst that completes a trifecta for higher agricultural commodity prices.
And that third catalyst is panic buying – especially with rice, which is a basic table staple in Asian markets. For instance, The Saudi Gazette last week reported that Bangladesh recently tripled its rice-import target and Indonesia just purchased 820,000 tons of Thai rice, nearly five times the volume initially sought.
“This is only the start of the panic buying,” Ker Chung Yang, a commodities analyst at Singapore-based Phillip Futures, said in The Gazette report. “I expect we’ll have more countries coming in and buying grain.”
For global investors, there are five reasons why it’s definitely time to buy rice futures.
Wheat is the second-largest commodities crop in the world, behind only corn. Wheat is one of the world’s most important cereal crops grown for human consumption. Investing in wheat futures allows traders to participate in the agricultural markets without holding a physical market position. Investing in wheat futures also provides growers with a risk management tool to protect the price of their expected purchase or sale of physical grain. The United States is one of the world’s largest wheat producing countries. Japan is one of the largest importers of wheat in the world, with imports originating from Australia, Canada, and the United States. Exportable wheat supplies are also available from Argentina, Europe, Ukraine and other areas of the world, depending on crop situations. This makes wheat a truly global market and allows traders to enter into a global environment to create a broad trading strategy using wheat alone or in combination with other grains.