Commodities Futures and Options Brokerage

Paragon Commentary

Futures File: Silver, Orange Juice & Corn

Sep 06, 2019

Hi Ho Silver!

Metals traders got a wild ride this week as silver prices first exploded nearly $1.50 per ounce in two days, then crashed even lower by Friday morning. Overall, silver has gained over $5.00 per ounce since late May; such a massive upward rise is typically accompanied by increased volatility.

Gold and platinum futures have seen huge rises and increased volatility as well as speculators shift from one metal to the other, hunting for bargains among these “safe haven” or “flight to quality” alternatives.

Many longer-term investors have joined the skeptics who are concerned about our financial system and assurances that the Federal Reserve and the White House will be able to stabilize and support stock prices indefinitely. These precious metals investors believe that the move to cut interest rates could cause inflation or be a signal that the trade war with China will slow global growth, causing equities to fall.

As of noon on Friday, silver traded at $18.45, gold at $1523, and platinum at $956 per ounce.


Dorian Spares Florida Oranges

Hurricane Dorian devastated the Bahamas and brought high winds, tornadoes, and dangerous flooding along much of the Atlantic Coast of the United States, but the storm largely spared inland Florida, leavings its orange groves intact.

Frozen orange juice futures exploded ahead of the storm, topping out at $1.10 per pound last Friday, only to tumble this week once it was clear the storm was heading farther north, dropping over 10% to near 97 cents per pound on Tuesday.

OJ’s wild action serves as a reminder that dangerous storms can make for treacherous markets as well.


Corn Prices in the Dirt

Corn tumbled again this week to as better crop conditions and warmer weather reduced threats to this year’s crop.

Meanwhile, U.S. ethanol production is near a six-month low and stockpiles of the fuel continue to rise. Nearly 40% of all U.S. corn goes to make the fuel, so the market is dependent on robust fuel demand.

Next week, the U.S. Department of Agriculture will release its newest outlook for the crop. Many market watchers are hoping that the USDA will show a drastic cut in acreage and yield projections that corn bulls have been expecting all year.

Thus far, the USDA has shown a robust and large crop despite their protests, keeping prices on a downward track.

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