Weekly commodity wrap-up

Heat hurting agriculture

Cattle in Kansas died by the thousands recently. Hogs and poultry farms are suffering too, as livestock are unable to cool down. Record temperatures have suddenly exceeded animals’ ability to cool themselves, both naturally and even in confined feed operations. Overall production levels are compromised because even those faring well in the heat are not eating properly, affecting health and safety.

As of midday today, for August delivery, lean hogs traded at $1.08, while cattle brought $1.37 per pound.

Large swaths of the Corn Belt are experiencing stress as farmers are watching long-range forecasts predict possibly reduced yields during the upcoming critical pollination period. Grain needs rain; high temps are only one of the factors that can impact yields. Unfortunately, the Wheat Belt also is experiencing extreme dry areas, especially in Kansas.

July corn was at $7.86, with wheat bringing $10.35 per bushel this afternoon. Soybeans traded at $17.05.

Gasoline makes a U-turn

A ferocious crash in unleaded gasoline prices drove July delivery gas down more than 30 cents per gallon on Friday morning. Gas made an ominous double-top at $4.31 10 days ago, then collapsed to a low of $3.643 (price is without taxes). There is no guarantee that your price at the pump will suddenly decline by an equal amount, but a drop in average pump prices can be expected. This week’s interest rate hikes from major central banks and possible subsequent recession were cited as the reason for the price decline.

Gasoline futures traded at $3.67 per gallon for July delivery, while crude fetched $109.50 per barrel, down $8.00 on the day.

Insane volatility in stock index futures

Though tumbling gasoline prices please auto-drivers, the steep decline in stocks and bonds has been challenging for a large segment of novice investors. The bullish crowd is confused about what to do with equities during a bear market. Most fear a crash could devastate their portfolios, as many own equities purchased near current prices or even higher.

A downward swing, of course, could be beneficial as piercing the bubble would allow the more conservative, patient investors with money on the sidelines to purchase stocks at lower prices as the bulls eventually bail out. Traders are monitoring the rate of inflation, the hawkish Federal Reserve, and geopolitical tensions, among other topics.

September S&P traded at 3,700, while the Dow traded at 30,000.

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