Russia Halts Gas to Poland

Midweek, Russia announced they would stop exporting natural gas to Poland and Bulgaria since Warsaw has refused to pay for Russian gas in rubles. By shutting off Polish gas, Germany may receive less gas, which will, in turn, reduce supplies to the region in general. There has been continued pressure on Germany to stop accepting oil and natural gas from Russia, but Germany has only agreed to diminish their purchases gradually. There is additional push on other sections of Europe and the United States to increase exports of liquefied natural gas to Germany and nearby nations receiving natural gas from Russia.

Natural gas, crude oil, gasoline and, most of all, diesel fuel moved upward. Diesel (heating oil) leads the bullish list with the most significant increase, up 120 percent since January. The debate regarding Europe's ability to reduce dependence on Russian fuel dominates all energy and general economic analyses.

Natural gas for May delivery traded at $7.26 per million BTUs on midday Friday, while June crude traded at $104.75 per barrel. June heating oil sold for $4.02 per gallon.

Wildfires Start Early

In a scary prelude to what may be in store for the 2022 fire season, the Great Plains have seen massive wildfires earlier than would be expected at this point in the season. Wildfires have spread across Nebraska to Texas and most of the southwest. New Mexico, in extreme drought, has also been hit hard. Eighty thousand acres in Nebraska were damaged, and nearly 5,000 homes were evacuated. Scientists note increased temperatures and the drought have impacted winter snowpacks and associated fires are likely to worsen. Ironically, much of the grain belt east of the Mississippi has a surplus of water that has slowed fieldwork for row crops there.

Although held down by higher mortgage rates and fears of an economic slowdown, lumber prices are generally boosted upward due to wildfires. There is a need for replacement housing while the supply of lumber is reduced.

Lumber for May delivery has risen from $825 per thousand board feet to $1,050 this week. May corn traded at $8.18. May soybeans traded at $17.10 per bushel, down roughly 30 cents this week, while May wheat closed lower at $10.44 per bushel.