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FUTURES FILES

Futures Flying-Inflation Returning?

Last week virtually everything went up–all commodities (agricultural and financial), real estate, wages, stock market, bonds, foreign currencies, lumber, sugar, even cryptocurrencies.

The Labor Department released the Consumer Price Index on Tuesday, which showed the biggest 12-month price jump since August of 2018. Much of that increase was due to gasoline prices, while other increases also seemed to be related to economic recovery and to confidence the pandemic will finally be subsiding.

Deficit spending, low-interest rates, and the “dovish” attitude of our Federal Reserve have all contributed to expectations prices will rise. Low U.S. interest rates add to a weaker U.S. dollar which, in turn, raises the cost of everything denominated in the Greenback. Cattle futures were a rare exception. The jump in feed costs caused ranchers to sell their animals as retaining them becomes too expensive.

As of midday Friday, May silver traded at $26.10 per ounce, June gold $1,778, June gasoline $2.05 per gallon, July sugar 16 ¢ cents per pound, and cattle for June delivery $1.19 per pound.

Biden Imposes Sanctions against Russia

Thursday, the president announced the U.S. will impose sanctions and other financial measures against Moscow in retaliation for cyber-hacking, troop build-ups, interfering with U.S. elections and allegedly placing a bounty on U.S. troops. Additionally, the U.S. expelled Russian diplomats from Washington because they were suspected operatives.

America is also watching China’s economic, military and technological gains in terms of possible competition. The growing relationship between Russia and China continues to be of concern as those two powers combined could dwarf the U.S. both militarily and financially should tensions escalate. The prices of everything from fuels, foods, and precious metals could explode at any hint of escalation.

Too Cool to Plant

With supplies of grains relatively low and exports hitting records, this year’s planting progress has become critical to monitor. Subsoil temps are still below average in most of the corn belt, which could reduce yields since the weather is delaying farmers from getting seed in the ground. There’s talk of hotter, dryer weather coming, something that could either be good or bad for yields. Regrettably, farmers seldom get both good crops and good prices.

Corn prices were trading at $5.73 per bushel for July delivery. July wheat traded at $6.52, and July soybeans at $14.21.

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