Today saw markets at a standstill after one of the strongest weeks in 2011, with major indexes regaining much of the ground that was lost over the last few months. But just as the celebrating of the Greek austerity package went underway, Moody’s cut its debt rating for Portugal, pushing stocks back lower in Tuesday trading. Commodities, on the other hand, had very strong days led by strength in the metal and energy markets. Oil and gold were two of the big winners with both gaining around 2%, with gold shooting back above the $1,500 per ounce level, which it briefly dipped below at the close of last week. In this shortened holiday week, investors hope to see July start off with the same momentum that June ended with, but continuing worries from the euro-zone may reverse the bullish trend that has been exhibited in the past few trading sessions.
One of the biggest commodity gainers on the day was wheat, which enjoyed the biggest jump it has seen in seven weeks amid weather concerns in the west. As heavy storms begin to hit Nebraska and Kansas, investors have quickly lost confidence on wheat output, which has sent prices soaring. Parts of Kansas, one of the biggest wheat producing states in the country, are predicted to see 1.5 inches of rain over the course of the next two days while areas in Nebraska could see an astonishing 4 inches. After wheat took a 7.4% fall last week due to higher than expected global production, futures gained an impressive 4% in Tuesday’s session, as lower outputs will likely push the commodity’s price higher around the world [see also The Ultimate Guide To Wheat Investing].
On the other side of things, cotton was one of the biggest losers today as weather concerns in numerous countries put a major damper on prices. Reports surfaced today that cotton buying overall has been lower, as many are waiting for the fluffy commodity to dip lower before buying into futures, believing the current contracts to be overvalued. Lower buying combined with a report of larger-than expected supplies from many of the world’s major producers put downward pressure on the commodity, as cotton is slowly losing grip on its meteoric rise that it saw for the majority of 2010. As a result, cotton futures dropped 2.8% in today’s trading and face more weakness if the economic situation in South Asia’s textile market doesn’t rebound soon [also see What Cotton’s Surge Means For ETF Investors].
Disclosure: Charts courtesy of Barchart. No positions at time of writing.