Weekly commodity wrap-up

Where’s the beef?

The cost of a Fourth of July cookout is up 17% this year, with ground beef responsible for the largest portion of the rise. The American Farm Bureau blames the price increase — about $7 per person — on supply chain disruptions, inflation and the war in Ukraine. Farmers’ and ranchers’ profits are not jumping in tandem with cattle prices, as costs for fuel and fertilizer raise the cost of production. According to the U.S. Department of Agriculture, farmers receive approximately 8% of each food marketing dollar. Last week, 160,000 pounds of beef were reported stolen in Nebraska.

Ironically, the price of August cattle futures contracts closed at their lowest level since May 31 on Thursday, demonstrating the phenomenon that futures typically lead the “cash” market paid at the grocery and don’t move up and down in unison. Cattle futures often hit a high just before July 4th. August cattle closed at $1.35 per pound today, while August hogs closed at $1.03 per pound.

Gas implodes on cooler temps

The price of natural gas deflated this week. Crude oil and gasoline also went lower. A shift to cooler temperatures in the Northeast was cited as a reason for the natural gas decline, as gas is used to power air conditioners. Germany saw a 35% decline in gas use because of cooler temperatures. The temporary down swing in crude was attributed to recession fears as interest rates increase. As of 1 p.m. today, August natural gas traded for $5.67 per million BTU while August crude was at $108.50 per barrel.

July crop report: Dud

Thursday morning, the USDA released their long-awaited crop report that outlined the total U.S. acreage planted and our stockpile of each grain in millions of bushels. Speculators anticipated fireworks as the official numbers were released, but most of the data, except wheat, were close to expectations. Wheat acreage was above expectations and triggered a 46 cent sell-off by Thursday’s close. Beans fell sharply on Friday largely due to global recession fears. September wheat finished the week at $8.50, down about 80 cents on the week, while December corn settled at $6.08 and November beans $13.94 per bushel.

Commodity quiz

List the world’s six largest countries (by land mass) and their #1 exports.

Answers will appear in next week’s Futures File.

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