Weekly commodity wrap-up

Inflation Sinks on Lower Fuel and Clothing Costs

Both the monthly consumer and producer (PPI) inflation gauges rose less than expected this week. The consumer (CPI) index rose only 8.5%, compared to a 9.1% rise in June. The rise in energy components declined along with clothing, foods, and new vehicles. Monthly, retail prices were unchanged from June to July for the first time in 25 months. The CPI tends to be a lagging indicator, so there is little guarantee that the rate of inflation has turned downward. Stock index futures rallied on the reports, but precious metals showed little change. As of Friday afternoon, the price of December gold was $1,818, while September silver traded at $20.80 per ounce.

Fuels Rally after gasoline falls below $4.00

Gasoline, diesel, and crude futures prices held steady after gas prices at the pump hit the lowest in five months, according to the AAA. Department of Energy statistics, however, indicate fuel supplies are low. Along with the public, farmers welcome the decline in fuel prices, as they look to the approaching harvest. Fertilizers such as urea and anhydrous ammonia also declined during the week, providing hope that input costs will help future profitability.

Natural gas prices shot up sharply all week due, partially, to hot weather. Disruptions at Shell production platforms in the Gulf of Mexico were being closely watched Friday afternoon. As of midday Friday, the price of September crude was $92.00 per barrel, October diesel fuel went for $3.50, and October gasoline fetched $2.79 per gallon, minus transportation and taxes. September natural gas $8.78 per 10,000 MMBtu.

Rhine River Drying Up

European heat and drought continue to cause water levels in the Rhine and other rivers to decline. Freight costs are rising because ships and barges can only be partially filled. Many vessels are being left three-quarters empty to accommodate the lower water lines. This reminds us, in addition to Russia’s blocking of shipping channels and the shutting off of the natural gas pipeline from Russia, that commodities transport can be even more critical than their production or consumption.

Government Shares Data on Crop Production, Supply and Demand

Friday’s report from the USDA was mostly bearish, as the U.S. soybean yield and the world 2022/23 soybean end stocks were higher than expected. The USDA increased Russia’s 2022 wheat crop and exports. By the close on Friday, Sept. Chicago wheat traded at $8.04 per bushel, while December corn went for $6.38. November soybeans brought $14.50.

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, KS. He can be reached at (800) 411-3888 or www.paragoninvestments.com. This is not a solicitation of any order to buy or sell any market.