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Alex Brietinger column: Prices for oats are on a roll

6:21 PM, Jun. 7, 2013  |  Comments
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Oats prices sprouted higher this week, jumping higher than $4 per bushel Friday morning, nearing a five-year high.

Rain in states such as North Dakota is delaying planting and hurting the quality of the crop, making the oats sitting in storage more valuable. During the last seven trading sessions, prices have risen a staggering 41 cents per bushel (11.2 percent).

Although oats are regularly consumed by humans, they are predominately used as feed for livestock and pets. As a result, oats prices can move similarly to other grains, especially corn.

After this recent rally, some traders are watching oats for signs about the future direction of the corn market, following an old adage "Corn follows oats." As of midday Friday, July oats were worth $4.11 and July corn was trading at $6.73 per bushel.

Natural gas deflates

Natural gas prices have dropped 47 cents (11 percent) over the past two weeks, falling to $3.81 per million British thermal units Friday morning. Analysts attributed the recent sell-off to higher-than-expected natural gas stockpiles. Inventories have been climbing amidst unseasonably cool weather. Natural gas is widely used to generate electricity, making summer air conditioning demand a major factor in that market.

As a result of a boom in shale gas drilling, U.S. inventories of natural gas are generally high and the price is low. The excess supply in the U.S. has prompted increased attention to exporting natural gas to Europe and Japan, where prices can be three to four times higher due to limited supplies in those markets.

Global stimulus end?

An announcement Thursday from the European Central Bank signaled that Europe, like the United States, may soon be done stimulating its economy. This caused a massive turnaround in the currency markets, as many traders had been expecting Europe to continue stimulus longer than the U.S. or Japan. As the markets reacted to the change, the U.S. dollar plunged in value compared to the euro and Japanese yen.

By the end of the week, the euro had climbed 2.2 cents (1.7 percent) to $1.32, while the yen gained 0.037 cents (3.7 percent), worth 1.03 cents, the highest price since mid-April.

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