Futures File: Retail prices hit 40-year high

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Jul. 16—Gasoline, food and rent accelerated the consumer price index to the highest level since 1981. Pent-up spending was stimulated by low interest rates, supply chain bottlenecks, government spending and declining COVID fears.

Economists, including some on the Federal Reserve, have been quick to note that many factors have already moderated or even reversed, making the 9.1% inflation increase a rapidly moving target. The high rate of inflation will add pressure on the Fed to raise interest rates by a full one percent at their meeting later this month.

Gold and silver showed no reaction to the report.

Crude oil drops

Despite reported energy-related rises, crude oil prices tumbled nearly $30 per barrel from their June 14 high to Thursday morning's low. The decline in crude has been largely attributed to fears of an economic slowdown or even recession, which would lower demand for petroleum.

The huge decline, along with declining gasoline futures, may hint toward a moderation in inflation in the coming months. Keep in mind, energy costs are a major factor influencing most, if not all, other finance and economic trends world-wide. September crude traded at $98 per barrel midday Friday.

Ukraine exporting wheat?

United Nations Secretary General António Guterres stated early in the week that a humanitarian agreement could be reached between the UN, President Vladimir Putin and Russian officials soon. Such a deal would remove Russian blockades at Black Sea ports and allow Ukraine to resume exporting wheat and other agricultural products. The deal may also allow Russia to get back to business by selling much-needed grain and fertilizer.

An agreement has the potential to relieve hunger and starvation caused by the war and related trade barriers. Wheat for September delivery fell on this news to $7.80 as of 1 p.m. Friday, down about 60 cents. December corn went for $6.05 with November soybeans trading at $13.43 per bushel.

Weather watch

The two-week forecast indicates dry and hot weather over the Southwest Corn Belt, but the rest of the U.S. Midwest will be relatively normal. Europe and Argentina continue to experience major crop-threatening drought conditions. Drought in the Western U.S. is ongoing, except for the Monsoon area in Arizona. Our U.S. plains (Kansas, Nebraska and Oklahoma) still need million dollar rains.

Destructive flash floods — attributed to climate change — damaged over a hundred homes in southwest Virginia.

Commodity quiz

Describe the goddess Ceres and her eternal significance to commodity markets.

Opinions are solely the writer's. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.