Much attention has focused lately on the run up in the production of agricultural commodities and its effect on food prices. Additionally, key crop input prices are also rising and show no sign of slowing, according to a new Rabobank report, "U.S. Crop Inputs."
The big question this week is whether oil continues to ease as it did for most of the past week. Oil fell for a fourth day on Friday in the largest weekly decline for more than three years.
As we have seen twice in the past week, sudden, sharp falls in the oil price produces sharp rises on Wall Street (especially in airline shares). Sharp rebounds see markets swoon, and when added to financial worries, it's a double swoon.
While oil trading dominated commodity markets last week lead slumped sharply, losing 13%. In contrast oil gained 3.3% over the week as Brent crude moved past $US146 a barrel on Thursday but eased Friday to $US144.95 a barrel. Nymex August West Texas Intermediate, which hit a record of $US145.85 a barrel, yesterday fell $1 to $US144.25 a barrel.
Once again, high fuel prices are dampening travel plans this holiday. More Americans will stay home this Fourth of July than last year, just as they did during the Memorial Day weekend.
Oil companies put the brakes on the U.S. economy this spring by manipulating the supply of diesel fuel and spiking the price, according to a new study commissioned by Consumer Watchdog. The detailed report shows that oil companies and their refiners produced less diesel, imported less diesel and exported far more diesel early in 2008 than in previous years.
Fitch Ratings expects that global steel prices will even out in 2008 once cost inflation of raw material is absorbed, according to a new report. Prices increases for steel have been rampant during the first six months of 2008 as companies seek to pass through increased raw material costs. The ability to increase steel pricing is essential to maintain margins for producers who do not control their sources of iron ore, coke, pig iron and scrap.
Oil remains the only commodity in town, so to speak, the others are all sideshows, even gold which came to life Thursday and Friday and ended the week well over $US900 an ounce and at a one month high.
Saudi Arabia has done its bit to try and put a lid on world oil prices, but more unrest in Nigeria has emphasised how fragile the market really is. As expected Saudi Arabia said it would raise its oil production by 2% from next month to try and curb record prices.
