Weekly commodity wrap-up

The Red Metal is on Fire

While all metals could play a role in supporting our post-pandemic economy, the demand for copper—also known as the red metal—may beat all other commodities when near-term demand is assessed compared to available supply. Copper is used in electrical wiring, appliances, and plumbing for the construction boom as city dwellers rush to suburbs and rural areas.

Our auto fleet is quickly converting from reliance on fossil fuels to electricity, creating another new demand for copper. The power to “fuel” our electric cars and everything else will be coming from renewable sources, primarily solar farms, which also use copper. Of course, copper mines are being constructed in South America and Africa, so a new supply should eventually answer the demand.

The high speed at which our economy is recovering from the pandemic should put the wind at our backs as there is more demand for cars, houses, and solar farms. The U.S. economy grew by 1.6 percent in the first quarter, a 6.4 percent annual rate, on its way to returning to pre-pandemic levels by the summer.

Gold, platinum, lithium, nickel, and, especially, silver could emerge as favorites as new technologies are developed, but, for now, copper shines above the others. This week, July platinum was $1206, down roughly $30 per ounce, June gold at $1771, and July silver at $26.00. Gold and silver were virtually unchanged on the week. A pound of copper, on the other hand, jumped up to $4.47 for July delivery.

Biden Announces Plan for Family Farms

In his joint address to Congress, President Biden described a $1.8 trillion investment in his American Family Plan which included assistance for nutrition, education, and childcare. The plan would be paid for with increases in capital gains and taxes on the most wealthy, but family-owned farms would be protected as long as the farm remains in the family.

Drought Creeps Toward Corn Belt

Weather forecasts toward the week’s end included a much-needed drink for some of the U.S.’s wheat and corn belts. But farmers, speculators, and end-users continue to watch the longer-term growing regions, mainly in the southwest, which is experiencing a drought. Corn for July delivery was up $6.70 per bushel this week, July wheat $7.30, and July soybeans $15.28.

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