WE HAVE A WINNER! - Congratulations to Michael de Souza who predicted most accurately the closing price of corn, which ended Friday down 4 ¼ cents at $3.27 ¾. Michael joins Global Resources with our compliments for a free annual subscription. Above average weather over coming weeks, according to forecasters, will boost production already primed to provide a bumper crop. While already depressed wheat prices remained steady, soybeans and corn prices fizzled. November soybeans lost 3.7% to $9.8150 on the Chicago Board of Trade.

ORANGE JUICE - Veteran citrus production forecaster, Elizabeth Steger of Florida, and founder of Citrus Consulting International Inc. surprised orange growers late in the week with a production forecast well above industry consensus. Her prediction for 154 million boxes (believe me, that's more juice than you should even think about drinking!) was above prevailing market forecasts of between 135 to 150 million boxes.

Ms. Steger has been making citrus grove field trips since 1992 to survey the health of the crop and of trees. The plight of citrus "greening" has been bad, leading to the prospect of lower production, but according to her report, farmers haven't cut out anywhere near as much dead-wood as they might have.

November orange juice futures prices fell the most for an actively traded contract in six months losing 7.7% to stand at $1.04. Regrettably we didn't take note of our own advice of last Thursday that prices would tumble from above $1.14 as hurricane season slipped idly by.

EURO CURRENCY - Despite a rebound in second quarter GDP growth in the second quarter, surprising many analysts looking for contraction in the 16-member Eurozone, the euro couldn't cling on to initial gains above $1.43. The euro ended the week strapped to the deck at $1.4165 after weakness for American equity prices prompted a move to more risk averse positioning.

The big winner on the week was the Japanese yen, which had earlier been used from the short side in order to fund positions in juicier trades in Brazil, Australia and anywhere that provides the prospect of a higher yield than practically zero available on the yen. The yen even outperformed the euro after the EU released data showing a decline in Eurozone consumer prices. Risk aversion was boosted in the U.S after the release of data showing a surprise decline in consumer confidence according to the widely watched University of Michigan survey. Its confidence index slipped to 63.2 instead of building on a recent winning streak by rising to 69.

Declines in bond yields and flattening of interest rate curves also brought the point home to investors that risk appetite was fumbling and created more demand for dollars and yen.

GOLD - Some of the drop in the value of the euro can be attributed to an annualized 0.7% decline in consumer prices. Deflating prices are naturally a threat to any currency, which is allegedly what makes gold a special investment instrument - it's known for keeping its value. At present trying to predict the price of gold is a game for brave-hearts only!

Gold also fell alongside the euro as the dollar rose in value. Typically commodity prices rise when the dollar falls. December gold futures tanked as much as $7.80 per ounce to $948.70 as the dollar benefitted from a risk aversion tone. Gold declined 1.1% on the week.

Gold is always cited as the ultimate investment in the case of either falling prices or rising prices. Gold tends to hold its value.

But perhaps that's the problem at present. Gold can't deal with this dynamic of both rising and falling prices simultaneously. Consumer prices in the U.S. did both in July. Annualized prices fell 2.1% through July using the broad index, but stripping out food and energy prices rose 1.5% over the course of the year.

For now the undecided inflation dynamic coupled to what the Federal Reserve termed a "leveling out" in economic activity last week is working more in favor of the dollar than against it. In that case, risk aversion trumps the notion that we should head for the hills.

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