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Market Falters Despite Continued Strong Demand

posted on November 7, 2003


Hello, I'm Mark Pearson.

Blue-collar industries jumped on the recovery bandwagon this week in another sign the economy is on the rebound.

For starters, the nation's manufacturers in October marked their highest level of activity in nearly four years. Construction spending in September posted its best month on record. And orders to U.S. factories recovered from their late summer slump, led by strong demand for cars, machinery and furniture.

The news had even the taciturn Alan Greenspan upbeat. The Federal Reserve Chairman said the odds increasingly favor a revival in job growth, the one element missing so far in the economic recovery.

It's in that setting that commodity markets this week churned their own numbers and tested the strength of recent price rallies.

 

Market Falters Despite Continued Strong Demand

The trade weathered an expected break in the bull market this week, as prices on several commodities took a post-harvest dive. Commercial and funds selling led the decline, although once prices hit a certain level -- about $7.65 on the January bean contract -- the buyers came back into the market. Most analysts expect prices to stabilize ahead of next week's crop report.

The bean market is, of course, being supported by strong demand from China for oil and meal. China's soybean imports doubled in the most recent marketing year and are seven times higher than five years ago.

Optimists view Chinese demand as bottomless, since its per capita consumption of soybean oil is less than one-fifth the U.S. average. And consumption of soybean meal in China's burgeoning livestock industry is fractional compared to U.S. standards.

In addition, China's cotton imports in the first nine months of the year are up six-fold from last year.

Against that backdrop, much of the U.S. harvest has wrapped up. USDA reports 85 percent of the corn harvest complete, while 91 percent of the soybean crop is in the bin. Down south, 55 percent of the cotton crop has been picked.

 


Tags: agriculture China markets news