Weekly commodity wrap-up

Crude Oil Boils as War Continues

Exports of Crude and Natural Gas continued to be threatened or reduced as geopolitical considerations are being weighed and more nations promise to stop buying fossil fuels from Russia. Though Ukraine is showing resilience, fears are emerging that Putin could turn to tactical nuclear weapons to secure a win. As a result, June crude oil blew over $110.00 per barrel on Thursday and remained there Friday morning.

June crude prices at midday were $110 per barrel, gasoline traded at $3.76 per gallon, diesel at $4.00, and June natural gas went for $8.25 per 10,000 mm BTUs.

Wheat Needs Water

Our southwest wheat-growing regions continue to suffer from brutal drought even though much of the corn belt to the east has damp conditions, delaying planting. Southwest Kansas, most of New Mexico, and California and the southern half of Texas are hot and bone dry.

The sharp run-up in wheat prices was also propelled by continued reports of reduced planting in Ukraine as farms have been abandoned or ruined due to the Russian invasion. Those who can plant lack fertilizer. Foreign countries continue to shop for wheat as Ukrainian and Russian wheat become increasingly scarce.

Kansas wheat for July delivery blasted up 50 cents on Thursday alone and hit a high of $11.89 on Friday. Prices of KC wheat brought $11.74 per bushel, and Chicago wheat was at $11.10 midday. July corn was at $7.82, while July soybeans traded at $16.25.

Longer-term concerns about the causes and effects of climate change were brought to the fore by the U.S. National Oceanographic and Atmospheric Association, which released data indicating the level of CO2 in our atmosphere reached 420 parts per million, the highest ever recorded in history.

Stock Index Futures Take it on the Chin

Like a giant yoyo, stock and bond traders used futures contracts to race into and out of equities and interest rate instruments all week. Speculators ran the S&P futures up to 4303 on Wednesday and the June Dow up to 34,027 following Fed Chair Powell’s assurance that a three quarters percent rate rise was not on the horizon. The Dow collapsed over 1000 points on Thursday and then an additional 500 points Friday morning. Exhausted traders abandoned the wild swings by midday, leaving the Dow in the 32,700 area.

Words of Wisdom: “The market can stay irrational longer than you can stay solvent.” ~ John Maynard Keynes.

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.