Weekly commodity wrap-up

Wheat and the war

This week brought seldom-seen volatility in commodity prices, with wheat supplies and demand in focus. The midweek Russian invasion of Ukraine, the accompanying relentless shelling and the broadening of the scope of the onslaught all contributed. The first territory Russia invaded includes some of the most productive, mineral-rich wheat soil on earth — even better than Russia’s. Scenes of thousands of refugees fleeing to Poland or Hungary stirred fears the world’s supply will be severely reduced. Ukraine and Russia combined provide more than 60% of the world’s wheat exports.

Wheat is the oldest and cheapest source of human food, with some evidence dating its production back to 20,000 or 30,000 years ago. Political upheaval and wars have been triggered throughout history by wheat shortages. For example, flour wars in France in the 1770s, the French Revolution, U.S. flour riots in the 1800s, bread riots in Egypt and the Arab Spring. Agricultural supply threats to grains and cotton affected even our American Civil War.

Most of the sharp rise in grains fizzled out or entirely reversed by this afternoon. The week’s massive volatility in beans, for example, saw the price explode more than $17.65 per bushel but tumbled almost two dollars at week’s end. As of this afternoon, May wheat was $8.60, May beans $1585, May corn $6.58.

Crude plows past $100, then falls out of bed

Wars, such as Desert Storm, have also been fought over oil supplies, and the U.S. has frequently been involved. Russia’s invasion of Ukraine could affect our energy prices here. The sanctions on Russia, including Germany’s halting of the Nord Stream pipeline approval, are a huge factor in the energy supply for most of Europe.

Crude oil spiked to $100.54 per barrel on Thursday but collapsed to $90 area just before today’s close. Natural gas, gasoline, diesel, gold, silver, all experienced upward spikes on Thursday and sharp declines today. April Crude oil traded for $ 91.15 per barrel near the close today while natural gas for May delivery brought $4.48 per million BTU’s, and April gasoline $2.87 per gallon. April gold brought about $1,890 per ounce, while May silver traded at $24.10.

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker in Valparaiso, Ind.