Weekly commodity wrap-up

Grains gain as supplies sink

On Tuesday morning, the USDA released some shocking statistics that confirmed fears about the world’s supply of grains, oilseeds and cotton reaching dangerously low levels. Corn rang the bell locking limit up at Tuesday’s close after rising the maximum allowed by the Chicago Board of Trade.

Soybeans jumped as well. Wheat rose nearly 50 cents per bushel over last week’s close as it was driven even higher by Russia’s restriction of exports. Today’s action saw a mild reversal as South America received some much-needed moisture. Dry weather in Brazil, Argentina, and the southwestern U.S. was partially responsible for the panic buying seen earlier in the week.

Crude reverses on COVID-19 concerns

Saudi Arabia’s plan to reduce production—which might signal Russia and U.S. producers look to join in the cut—combined with stellar Chinese oil demand figures stimulated buyers to chase crude oil and its products to the highest level seen in nearly a year. But the bullish trend established over the last several months made a U-turn today as OPEC members were spooked by new COVID-19 lockdowns in both China and parts of Europe.

Silver loses its luster

Strength in the U.S. dollar toward the end of the week sank silver into its lowest close for the week, down more than $3 from the last week’s high, trading at $24.85 per ounce. Gold, platinum, and copper also declined at week’s end, with February gold trading at $1,830 per ounce, platinum at $1,087 and March copper at $3.60 per pound.

World temps warm up

Both NASA (National Aeronautics and Space Administration) and NOAA (National Oceanic and Atmospheric Administration) released global warming reports this week. According to NASA, 2020 tied with 2016 for the warmest year on record and NOAA said 2020 was the second warmest in history. Either way, climatologists would agree that our Earth is heating up, which will impact crop production and energy consumption and production. While storms, fires and rising sea levels are likely to increase, futures traders will closely watch the legislation and costs associated with responding to the long-term warming trend as well as the risks associated with delaying attempts to reduce greenhouse gas emissions.

Most commodity futures markets will close early on Monday due to the Martin Luther King holiday.

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, Kan.

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