Weekly commodity wrap-up

Bumpy ride for grain commodities

An improved forecast for the month of August bringing cooler temperatures and better chances of precipitation had corn and soybean futures markets reeling early in the week. December corn futures were down $0.37 (7%) from the start of the week to Thursday afternoon. November Soybean Futures were down $.5725 (4.1%) in the same time frame.

The wheat market also performed poorly, and this surprised some as the August weather will have little to no effect on a wheat crop that is harvested or being harvested right now. Combine this with the fact that Russia continued to use Ukraine grain terminals and warehouses for target practice, and it seems that the market is no longer concerned with Ukraine’s grain export abilities. Sept Chicago Wheat futures were down $.7725 (11%) from the start of the week to the close on Thursday.

The escalations continued when news of a Ukrainian naval drone hitting a Russian Navy ship near the Russian port city of Novorossiysk hit the wires early Friday morning. Grains bounced back initially but still couldn’t manage to hold gains.

Russia is the number one exporter of wheat and a threat to its export ability could pack a punch, not to mention the worries that come with escalations that continue to spill over onto the Russia side of the border in this conflict. Ukraine’s attempts to inflict harm inside Mother Russia’s borders might feel like a mosquito pestering a bear but enough bites and hopefully the bear will stop to scratch. Too many bites and the bear might lose its mind and destroy the neighborhood unless someone is able to put it down.

Trading places

Of the two breakfast drinks that are commonly traded — coffee and orange juice — coffee has been the darling both in preference and price but in the last year O.J. prices have taken the high ground.

Orange juice, like many commodities, has been moving higher since 2021 as inflation combined with surging demand for certain goods led to monster price increases.

The situation has been complicated by a seriously diminished orange crop in the state of Florida. The list of reasons leading to the reduced supply are numerous, natural disasters including hurricanes, a frost and Huanglongbing (a menacing disease also known as citrus greening) have been squeezing supplies for the past several years.

It is to the point where last month the USDA projected Florida growers will produce just 15.85 million boxes of oranges, the lowest level seen since the 1930s, which has led to all-time highs in price recently topping out at $319.40 this week.

Have a comment or question? Please reach out to derrick.hermesch@pinion.global.com

Opinions are solely the writer’s. Derrick Hermesch is a commodity futures broker with Pinion. He can be reached at 785-338-9605. This is not a solicitation of any order to buy or sell any market.