Another Interesting Week Lies Ahead

06/08/11 -- News out late Friday, after the markets closed, that S&P's have downgraded America's credit rating to AA+ with a negative outlook sets us up for an interesting week ahead.

The fallout from last week hasn't really hit the grains too hard just yet with corn closing higher on the week as a whole, wheat little changed and soybeans a bit lower, but nothing too dramatic.

The FTSE100 though has just had it's worst week since the height of the previous financial crisis, falling almost 10% as GBP149 billion was wiped off it's value in a week. Stock markets around the world have fallen a combined GBP1.5 trillion since the month began, according to today's Daily Telegraph.

NYMEX crude fell 9.2% last week with Brent tumbling 8%, yet CBOT corn bucked the trend with a 4% increase.

A brief bit of respite for crude and equities was gained on Friday from news that US unemployment fell slightly from 9.2% to 9.1%, although that was largely because 193,000 people gave up looking for work, not because a significant number found new jobs. Those guys are hardly going to be big consumers of anything that will help drive the US economy forward are they?

Italy meanwhile are running around with their hand out only to discover that the rest of Europe has the "on vacation" signs out whilst Rome burns. Borrowing costs there rose above those of Spain for the first time since this all kicked off on Friday.

The big question this week is can the grains continue to divorce themselves from what is happening in outside markets around the world? Personally I suspect not.