The Suez Canal—which connects Europe to Asia—is blocked by a ship run aground. Specialist dredgers are attempting to dig it out. Nine billion dollars in goods typically travel through the canal each day. With marine traffic at a standstill, crude oil spiked. It shows how interconnected and dependent the whole world might be on one ship in one 300-foot waterway. With the canal impassable, hundreds of additional ships are piling up as they wait to get through. So far, efforts to remove the ship have failed, and it is not expected to be removed for at least a week.
Quantities of natural gas, fertilizer and other basic commodities and huge quantities of manufactured products are delayed. Shipping rates have spiked as vessels have been forced to take a longer route to deliver goods, causing traders to panic. There was already a shortage of available ships to haul grain to China, and the delay has exasperated that. Additionally, the number of ships queued in the Suez has risen to over 230.
Gasoline demand tends to increase as driving weather improves. This year, in particular, pent-up demand due to the pandemic seems to be increasing gasoline consumption faster than usual. It’s a perfect storm to drive prices higher. As of midday Friday, crude for May delivery was trading at $60.90 per barrel, while April gasoline was at $1.96 and April diesel fuels at $1.80, both per gallon.
Wheat Takes It on the Chin as Weather Improves
All grain and oilseed prices fell during the week, with wheat down the most. The third-largest corn sale in history helped prop that market up. Even so, wheat prices were pounded by the prospects of better yields as the Southwest received moisture. Oats, soybeans and soybean oil were down with better growing weather in South America, hinting that bigger supplies will come from that critical region. The increasing worldwide shortage of cargo ships could play havoc with the grain trade and become even more important than the weather next week. As of noon Friday, Wheat was at $6.17, oats $3.74, corn $5.48, soybeans $14.03, all per bushel, and bean oil 55.80 cents per pound.