Weekly commodity wrap-up

Freight Strike Derailed

Republican and Democratic congressional leaders, followed by the Senate’s approval, averted the disastrous rail strike. A freeze on rail transportation could have crippled the US economy by interrupting the supply chain of commodities across the country. President Biden brokered the deal, which included a 24% pay raise for workers spread out over 5 years. He signed the legislation early on Friday. Bulk agricultural, energy, industrial, and mining products, as well as finished manufactured goods, will continue to roll across the U.S.A.

Bean Oil Slides Limit Down on Options to Biodiesel

The Environmental Protection Agency supports the switch from petroleum-based fuels to fuels produced from biodiesel, which contains blends of soybean oil and diesel made from crude oil. However, new standards may include a more widespread use of electricity, natural gas, and ethanol in the mix too. This expectation caused soy oil traders to hit the exit Thursday. Other bearish factors that knocked beans down included a strong U.S. dollar and heavy Argentine selling.

Europe to Cap Russian Oil Price

In an attempt to reduce Russian oil income, the G-7 (a group of seven of the world’s industrialized nations) announced an agreement to place a cap of $60.00 per barrel on all purchases of Russian Oil. The price cap faced criticism late Thursday as analysts scoffed at the ability of the group to enforce the cap. Reports circulated that China is already buying Russian crude again, casting doubt about the cap’s effectiveness.

Biggest Gainers and Losers

March Silver was the star this week. It gained over $1.40 per ounce, while gold increased by $40.00. Crude oil and foreign currencies were sharply higher, with the March Yen up a whopping 2 cents week-to-week. Stock index futures were all up with the December S&P trading near 4050 midday Friday. The biggest loser was March soybean oil, down over 6 cents per pound. Beans, corn, and wheat went down sharply as well. December corn closed the week at $6.34 per bushel, while December wheat settled at $7.43, January beans $14.40. February lean hogs closed at $.9020 per pound and February live cattle closed at $1.5590.

Words of Wisdom

[What advice would you give the novice trader?] – “First, I would say that risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half.” ~ Bruce Kovner in Jack Schwager’s Market Wizards

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.