Weekly commodity wrap-up

Natural Gas Price Explodes

Natural gas prices have nearly doubled in the past 12 months, reaching $5.06 per million British Thermal Units (BTUs) early Friday morning. (A BTU is the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit.) It has been over 12 years since prices were this high, and they could fly sharply higher in the event of a colder than usual winter. Gas, which is the main source of home heating in the U.S., is also used to generate electricity for manufacturing industrial products, chemicals, and fertilizers.

Supply shortages and demand increases are responsible for the increase. The supply side was threatened by production shut-downs in the Gulf from hurricane Ida and earlier storms right as total gas in storage was significantly below average. The excessive heat in many areas increased gas use to make electricity for air conditioning. Meanwhile, Europe is facing an acute shortage. Germany is negotiating to buy their gas from the new Russian pipeline. Russia is Europe’s largest gas supplier, making many countries vulnerable to political problems with Putin. Natural gas for delivery in October traded at $4.97 per million BTUs on Friday.

Crop Report Briefly Sends Grains Lower

The much-anticipated report was seen as “bearish” but only pushed prices lower for the few minutes following its release. According to the USDA, the size of this year’s corn crop was estimated as 14.996 billion bushels, which was based on a yield of 176.3 bushels per acre. Soybean production came in at 4.374 billion, and that’s based on a yield of 50.2 bushels per acre. China’s production of corn was less than expected. Beans tumbled sharply on the report but recovered by closing time to trade 22 cents higher. Toward closing time at the Chicago Board of Trade, December corn traded at $5.17 per bushel while November beans traded at $12.86, and December wheat brought $6.91 per bushel.

Cup of Joe Reduces Cancer Risk

Coffee not only helps kick-start your day, but research from the British Medical Journal also suggests drinking coffee reduces the risk of prostate cancer. Other studies have shown coffee consumption lowers liver, bowel, and breast cancers too. Arabica coffee futures for December delivery traded at $1.88 per pound.

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.