The banking system in Cyprus continues to totter near collapse as Cypriot banks try to figure out a way to make up for deep losses they suffered by investing customer deposits in Greek bonds.
Cyprus has been pledged bailout funds from the European Union, but it is required to come up with as much as 5.8 billion Euros ($7.54 billion) in matching funds on its own. So far, a variety of plans to come up with the money have failed, including hopes to sell off natural gas reserves to Russia, seizing up to 10 percent of investor bank deposits or to nationalize pension funds.
Banks in Cyprus have been closed since March 16, and some analysts fear that one resolution of this crisis could be that Cyprus leaves the euro currency. Although the island nation has a population of less than 1 million, there are fears that Cyprus’ exit from the Eurozone could set off a domino effect causing other indebted nations like Spain, Italy and Greece to do the same.
During the last week, the euro currency tumbled to a four-month low, hitting $1.2852 on Wednesday. In the last two months, the currency has dropped in value by over seven cents (5.1 percent).
Natural Gas Explodes Higher
With slowing production and higher demand, natural gas prices have soared upward in the past few weeks. Recently, unseasonably cold weather has increased consumption of natural gas by U.S. households to heat their homes. Additionally, the outlook for gas production has turned downward as the number of U.S. natural gas drilling rigs has dropped by a third since last year. Stronger consumption and lower production have caused U.S. natural gas reserves to drop over 20 percent from a year earlier.
Natural gas prices were at $4 per million British thermal units, up over eighty cents (25 percent) over the last five weeks, and double the price since last year.
Corn Pops on Supply Concerns
Concerns about low corn stockpiles pushed prices to a six-week high. Market analysts are citing stronger demand from ethanol plants, which use corn to make the fuel additive. The U.S. has lower-than usual corn stockpiles due to last year’s drought and ensuing small harvest. As of midday Friday, corn for May delivery was worth $7.25 per bushel.