Wheat and Corn Collapse
Wheat and corn prices plummeted all week on reports that Russia may allow exports from Ukraine. Domestic planting also finally progressed, and foreign countries ran into shipping problems or were low on funds to buy U.S. grain. The price declines occurred despite high input prices (fuel, fertilizer, pesticides, and labor), most of which were factored in last month. Investors also ignored weather problems, especially extreme drought and fires in the Southwest. Nationally, only 86% of our corn has been planted, 73% of our spring wheat, and 66% of soybeans.
As of Friday’s close, July Corn traded at $7.27, and July beans $17.00. July Chicago wheat traded at $10.40, down more than $1.00 per bushel from last Friday.
Lumber Stumbles as Rates Rise
The record explosion in lumber prices related to the pandemic slowed down then turned into a nosedive as higher interest rates scared home buyers and bankers alike. Home prices have continued upward but builders and buyers cannot afford to chase prices higher with 30-year mortgage rates now over 5%. Lumber for delivery in July crashed below $600.00 per thousand board feet, a decline of 50% from the high in March. July lumber went for $629.00 at Friday’s close.
Crude, Diesel, and Gasoline Sail to New Highs
On Monday, European leaders finally agreed on a Russian oil embargo. The response to the Ukraine invasion will be phased in over several months and will exempt oil delivered by pipelines. The sanctions may punish Russia but will also raise energy prices and inflation throughout Europe and beyond.
The Organization of Petroleum Exporting Countries agreed to increase production in order to aid suffering countries, but prices of crude oil and its refined products blasted upward all week. The OPEC nations are clearly capitalizing on the situation as they attempt to help by providing the fuels.
By Friday, July crude hit $119.40 per barrel, July gasoline $4.25 per gallon and diesel for July delivery shot over $4.30.
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.