Weekly commodity wrap-up

Supreme Court rules against EPA

In a unanimous ruling this week, our country’s highest court overturned one of their earlier decisions regarding a contested habitat in Northern Idaho. The case, ongoing since 2007, involved a farmer who had back-filled a wetland the Environmental Protection Agency (EPA) designated as “connected to waters of the United States.” The EPA considered it a violation of the Clean Water Act. The American Farm Bureau viewed the verdict as a big win for agriculture and landowners, as well as a reason for the government to re-visit wetland regulations. This will dramatically narrow the amount of land protected by the Waters of U.S law. Energy commodities and metals will also be affected, since mining and drilling in wetlands will probably increase because of reduced protections. Environmental groups emphasized the disappearance of wetlands—which are invaluable for flood control, pollution and erosion abatement, and supporting wildlife. More than half of U.S. wetlands have already been lost in the lower 48 states.

Iowa farmland jumps 17%

The cost of an Iowan farmland acre rose $279 per acre compared to the average price of 2021. An acre now goes for $11,411. According to Iowa State University, the increase represents a 17% increase year-to-year. Nationally, farmland went up $148 per acre during the same period. High commodity prices, farmers with high equity levels, and general inflation are cited for the land value increases.

Rate futures scrutinized by farmers, builders and bankers

Unlike agricultural, metals, or energy futures, interest rate futures provide a tool for commodity producers, consumers, and lenders to offset interest rate risks. Those same futures contracts make it possible for speculators to enter trades that can be profitable for those who correctly predict the direction of treasury bonds and notes (which move opposite of long-term interest rates). Underlying support for these futures emerges as speculators’ belief that the central banks, especially U.S. banks, cannot continue to raise interest rates for much longer strengthens. Interest rates have rapidly become a major aspect of the cost of production and storage for all financial futures, including currencies and stock index futures. Friday at noon, June treasury bond futures were trading at 125 20/32.

Weekly winners and losers

Frozen orange juice hit an all-time high of $2.959 per pound, while cattle, the U.S. dollar, and July corn (up roughly $.50/bu) were also sharply higher. As of midday Friday, all other actively traded contracts were down on the week. Natural gas, hogs, and soy meal were among the biggest decliners.

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.