Most equities took a crushing blow today, as weak data led to downward pressure on all of the major benchmarks. Though many commodities were able to stand their ground during today’s sell-off, like gold which gained 0.8% to sit at just under $1,550 per ounce, others were not so lucky. After having several strong days in succession, crude oil closed out its shortened trading week by dropping 2.3% to $96.4 per barrel. Today derailed the market strength that had been persisting since the end of June, when investors and analysts started to gain glimpses of optimism for an economic recovery. But with earnings season kicking off next week, data from hundreds of market-leading companies could turn stocks around, or send them spiraling further down to start the second half of the year.
One of the biggest commodity winners on the day was corn, which saw a major increase in prices due to heatwaves throughout the U.S. As the largest producer and exporter of the crop, major snags in the U.S. production of this crop can lead to major blips in the futures prices, as a mixture of heat and a lack of rain predicted over the next few weeks spurred worry of a supply shortage. To be more specific, major producing regions, like Nebraska and much of the Midwest, are predicted to see temperatures near 100 degrees Fahrenheit with overnight lows above average, stressing crop yields in the process. This also marked the first winning week corn has seen since May, as futures topped off the day by gaining 3.4% to close out the period [see also Ultimate Guide To Corn Investing].
Several commodities endured a rough trading session, but few fared worse than cocoa futures, which plummeted 3% on the weak jobs report. The U.S. was expected to report approximately 125,000 jobs added in the month of June, but instead reported a meager 18,000, marking the second straight disappointing month for new jobs in the domestic economy. More specifically, analysts are worried that with a weakening macroeconomic outlook, demand for this nonessential commodity will rapidly shrink, sending prices into a free fall. Cocoa’s drop also points to an overall struggle with soft commodities, as sugar and coffee both lost significant ground today, despite sugar’s strong push yesterday. In addition to worries over demand, traders also sold off these soft commodities on a moderately stronger dollar, a scenario that makes products such as cocoa and sugar cheaper when bought in U.S. dollar terms [see also Ultimate Guide To Cocoa Investing].
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Disclosure: No positions at time of writing.