Two Kings Unthroned
The two biggest commodity markets as determined by dollar value traded were the two to tumble the most this week. Crude, the world’s king of commodities, had been over $130 per barrel in March 2022. It had a bounce up toward $82 on Tuesday but plunged more than $9 by Thursday. Fears of a Covid-slowed China economy was seen as one cause. Improved relations between President Biden and Saudi Arabia played a role as well.
King Corn, as those in the agriculture sector of the economy know it, fell from last week’s high of $6.85 per bushel to a low of $6.48 ½ on Thursday. Slowing Chinese demand also played a part.
Although the declines are bad news for corn farmers and oil drillers, there is always another side to the story. Lower production costs suggest consumers further down the supply chain should eventually see less expensive energy and protein prices.
Natural Gas Deflated
Warmer winter temps diminished fears of natural gas shortages and explosive prices. At the same time, supplies of liquified natural gas are being shipped to Germany, there’s been an increase in conservation measures and more infrastructure is being developed to receive gas. All of that converged to drive prices downward. The huge Freeport gas facility in Texas may be resuming production soon, which could add even more supplies of LNG. Gas imploded nearly a dollar this week.
Metals March Upward
Gold and copper advanced sharply this week, with silver and platinum joining on the upside. Precious metals usually fall as the stock market rallies (which it did this week), but reports of central banks buying to fill their vaults stimulated the bulls.
Scary Weather Here and Abroad Threatens Food and Housing
Storms in northern California caused floods, power outages and evacuations of over 100,000 residents, and more storms are expected. Many suffering from the floods lived in the same areas impacted by recent fires. Dry weather in Argentina and Brazil continues to be a concern for soybean farmers there. Following record cold temperatures last year, Germany, Denmark, France, Poland and Spain have experienced record high temps for January so far. NOAA released another report predicting Manhattan will be underwater by 2050 if climate change continues on its current track.
Weekly Leaders and Losers
The biggest up markets this week were March cotton, up almost two cents per pound, and February gold up $45 per ounce. The loser was February crude oil down $6 per barrel.
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