Weekly commodity wrap-up

Platinum popular for reducing pollution

New pollution regulations, including proposals by President Biden, will create a demand for platinum group metals. The platinum group, which includes palladium, is used in catalytic converters. Most petroleum fueled cars and trucks have catalytic converters to remove carbon monoxide from emissions.

Electric vehicles might become an increased portion of new sales in the years to come, but internal combustion engines will probably comprise the majority of vehicles on the road in the meantime, creating continued demand for converters containing platinum metals.

July platinum futures have blasted upward $100 per ounce in eight trading days, as speculators look at potential demand for the white metal.

Grains lose ground as demand wanes

Poor exports for major U.S. crops scared traders and deflated support all week. Despite production being plagued by continued drought, optimism for moisture relief in some of the driest areas also added downward pressure to prices, especially for corn and hard red winter wheat.

Fuels get tanked

Continued deterioration in the world’s economic outlook sank crude prices and its products all week. Russia’s success at selling its cheaper crude to China added a bearish tone, as Russia has plenty more to sell, and China’s business shifting there will hurt demand for U.S. produced fuels.

What are speculators?

Although a large portion of futures traders are farmers or other commodity producers who sell their goods through exchanges, some traders are speculators. Speculators are a unique group who attempt to profit by buying and selling futures contracts.

They acquire goods, natural resources or property based on a prediction or expectation that it will become more valued by society in the future. Like explorers, pioneers or inventors, they attempt to foresee what people will value in the future rather than attending to present needs.

Stocks, bonds and real estate provide arenas where speculators can make predictions and take risks with the hope of rewards on correct predictions. During the past two hundred years, commodity futures contracts also have been popular instruments for such speculation.

In future editions of Futures File, we will compare and contrast speculators to investors, gamblers, hedgers and, in particular, explore their economic role.

Weekly winners and losers

Platinum was up $100 per ounce. Palladium was up $125, while cocoa gained $85 dollars per ton.

Cotton was down 2 cents per pound, and Kansas city wheat lost 35 cents per bushel, with Chicago wheat dropping 20 cents. Corn lost nearly 25 cents from last Friday. Crude oil fell $4 per barrel, with diesel dropping 15 cents per gallon and gasoline declining 16 cents.

Livestock remained within last week’s parameters.

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.