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Pulse Price Report: Jan. 8, 2016

Crop prices (Jan. 4)

Rio Creek Feed Mill – Algoma

Commodity Price Basis
New-Crop Corn $3.33/bushel -0.50
New-Crop Soybeans $8.08/bushel -0.75
New-Crop Wheat (SRW) $4.18/bushel -0.65

 

Fox River Valley Ethanol – Green Bay

Corn $3.26/bushel -0.33
New-Crop Corn $3.43/bushel -0.40

 

Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

 

Gas Price Averages

United States: $1.99

United States one year ago: $2.21

Wisconsin: $1.93

Wisconsin one year ago: $2.14

Northern Door: $1.99

Sturgeon Bay: $1.98

 

Other Commodities

Gold: $1,079.00/troy ounce

Silver: $14.02/troy ounce

Oil: $38.08/barrel

Live Cattle: $1.36/pound

Lean Hogs: $0.59/pound

 

Commentary: Gold prices are in a volatile swing and the trend will continue with continued confidence in the U.S. economy paired with an unstable global economy. The public likes gold not just for dressing up, but also for the stability that it provides in an uncertain economic climate.

Gold is valued highly around the world and is not tied to politics like the paper currency of a country. It is the commodity that people fall back on when there is tumult nationally or internationally. But it is also a slave to supply and demand, so the more people (and banks) buy gold to hold on to, the higher the price.

Gold prices have decreased by more than 10 percent in the past year and that decline has been steady since 2012. Before 2012, the price of gold increased in response to the 2008 recession.

When the recession hit and banks were in trouble, people were worried about the safety of their money. They bought gold for some stability and that drove the price up.

Meanwhile, the value of the dollar had decreased leading up to 2008 so the public bought up gold hoping that the metal would hold value as the dollar kept falling.

The value of gold peaked in August 2011 at $1,916.25 per troy ounce. Although the economy was far from recovered at this point, Americans did have enough confidence to sell off gold and put that money elsewhere. This gold sell off started the decline in gold prices that continues today.

Since the Federal Reserve is expected to continue the hike in interest rates that it started in December, we can expect gold prices to continue decreasing. Gold is not subject to interest rates, making it a good investment when rates are at zero, as was the case for the past seven years. But as interest rates increase, people may think they can make more money by investing in stocks or savings accounts.

However, the decrease in prices may be less severe as continued volatility abroad, both in the Middle East and China, whose stocks dropped seven percent upon opening on Monday this week, encourages the purchase of gold for safe keeping.

– Jackson Parr

 

Sources: aaa.com, agweb.com, gasbuddy.com, cnn.money

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