Fears of global recession, higher interest rates, poor exports, and rain forecasted in some of our driest areas triggered huge selling and money flows from funds midweek. Thursday brought the biggest crash in weeks for grains, beans, cotton, copper, energies, and most other commodity futures. As wheat and corn exceeded four-month lows, traders touted the simple but appropriate reminder that “what goes up must come down.”
Those blaming weather for the decline had plenty of fodder as rain hit France. It’s also predicted to rain during the first half of July in our Delta, Eastern Corn Belt, and the Tennessee River Valley, which could bring relief to dry crops. Heat moving into the Eastern U.S. and South provided bullish arguments and fueled an upward spike during the last hour of trading on Friday. Others saw exports of beans dropping due to China switching their business to South America.
As of the close of grain trading, July corn brought $7.50 per bushel, July wheat $9.24, July beans $16.11, July cotton 1.0376 per pound and July Copper 3.736 per pound. These prices were all below the close of the previous Friday.
Energy markets join wild ride
Excessive vacillation continued in crude, its products, and natural gas for some of the same reasons, but with the war adding supply uncertainties. Ukraine is on the verge of losing Severodonetsk, the second largest remaining city still under their control while Russia makes plodding progress toward their goal to seize the eastern Donbas region. China has increased natural gas purchases from Russia, which worsens the shortage in Europe and helps finance Russian war efforts. China’s import of liquified natural gas from the U.S. has dwindled to almost nothing, although the U.S. is the top supplier to Europe. President Biden’s proposal to suspend taxes on gasoline and diesel fuel temporarily had little impact, but drew attention to the role of taxes in petroleum products.
As of Friday afternoon, August crude traded at $107.35 per barrel, Aug diesel $4.23 per gallon, unleaded gasoline at $3.77, and August natural gas at $6.27 per mm BTUs. All were lower with natural gas down the most.