Why are Commodity Markets having a meltdown today?
Apr 15, 2013
Major commodity market meltdown this morning with Gold down almost $100 per ounce (at one point trading below $1,400); Silver down over $2.00 per ounce (trading below $23.00); Crude oil down almost $3.00 at one point (trading around $88.00), There are several reasons for the heavy liquidation but one of the biggest might be the Chine economic recovery NOT being as advertised. On Sunday night China's 1st Quarter GDP numbers showed growth of only 7.7%...the trade was looking for a number above 8.1%. This unexpected slowdown in China might have caused traders to rethink overall commodity demand. As for Gold liquidation, traders seem worried that with Cyprus selling their gold holdings to pay their bills, other European nations may soon be forced to follow suit. The outside markets will provide very strong headwinds! Grain traders will be waiting to see the latest USDA weekly wheat conditions report. I am thinking this number will be much worse than last week, so it will be hard for the market to reduce much grain risk-premium. My guess is once the weather shows a small window of opportunity for the planters to roll, the weather premium will quickly be removed... but until then I don't see any major push to the downside. For the entire story and what producers should be doing going forward, CLICK HERE.