Weekly commodity wrap-up

Gas and Crude Surge as Supplies Tighten

Natural gas exploded to the highest level since 2008 and crude hit the highest prices since March. Natural gas is being boosted by approaching summer temperatures. Air conditioning is powered by electricity and generated by gas. Fertilizer, also made from gas, has been in demand as gas supplies from Russia are threatened. The U.S. seizure of an Iranian Oil tanker and plans for an E.U. embargo deal contributed to speculation that petroleum will be driven higher.

Natural gas for July delivery hit a high of $9.44 per 10,000 mm BTU on Thursday. Friday afternoon natural gas was $8.68, while July crude traded at $114.50 per barrel.

Tulip Bulb Mania

The massive rise in our stock markets, housing, and Bitcoin causes some to look at past bubbles for hints of what may happen in our financial future. One haunting example of financial group behavior began in the Netherlands in 1634. Investors purchased tulips, watched the price spike, and stampeded into a speculative frenzy which accelerated until February of 1637 when prices suddenly collapsed.

Toward the end of the “Tulipmania,” allegedly the middle-class public drove the price of a single tulip above the value of the average house. Investors were certain the price would rise further or even indefinitely. The breathtaking speed of the crash when the bubble burst was like our U.S. stock market crash in 1929 or smaller crashes in 1987 or 2008. Of course, modern safeguards seem to assure today’s investors that bubbles cannot happen again and that a bubble cannot be burst again. We’ll see.

NOAA Predicts Huge Hurricane Season

Our National Oceanic and Atmospheric Association released their forecast of named storms, including up to ten hurricanes with six of them major. This forecast ranks as the second worst in history next to 2020. NOAA and the International Panel on Climate Change attribute the storm frequency to climate-change warming sea-surface temperatures Increased storms mean increased rainfall, which would be welcome if it reached our Southwest. Regrettably, the rains ‌have been on our East and Southern coasts and do not move on to where the moisture is most needed.

Pigs Fly, Sugar Sours

Hogs won the award for the biggest rally this week of all our domestic agricultural markets, whereas sugar was down the most. Friday afternoon, July Hogs were at $1.1150 per pound, up almost 2 cents on the week. Sugar for July delivery brought $19.59 per pound, down about a quarter penny. July corn brought $7.77 per bushel, July beans $17.37, and July Chicago wheat $11.66.

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.