Futures File: Tuesday was National Down Day

·2 min read

Jul. 9—Nearly every market — domestic and foreign, farm and financial, short term and long term — took a nosedive Tuesday, right after our nation's birthday celebration. Investors, already reeling from the worst stock market decline in 50 years, harbored little hope of recovery.

Rising interest rates, war and inflation fears pulled the rug out from stocks, bonds and the price of crude oil, which crashed $10 per barrel.

Markets make a u-turn

But optimism quickly followed the washout as consumers mulled over the benefits of the 22 consecutive day decline in gasoline prices (per AAA), with agricultural and energy prices reversing to the upside Thursday. Ironically, many analysts attribute the skyward reversals to the worsening drought. The weekly U.S. Drought Monitor reminded investors that water is in extreme jeopardy, so commodity prices made the u-turn to the upside.

Drought back on radar

Millions of acres of grains and cotton are being lost to drought. Extreme triple-digit heat in the western half of the U.S. is back on our radar after holiday celebrations. Dryness is also plaguing Europe's Wheat Belt. Agricultural commodities, especially wheat, corn and cotton, rocketed upward Friday as supply shortages based on weather re-emerged as the top concern.

Crude replaced gold toward the end of the 20th century in the old phrase referred to as the "Financial Golden Rule." So now it's more like, "He who has the crude makes the rules." Maybe "whoever has the water will make the rules" will be the mantra in the future.

Weekly price changes

Corn for December delivery closed at $6.23 on Friday, up a few cents per bushel. December wheat was about unchanged on the week. November beans up to $13.96. August crude brought $105 per barrel, while August unleaded gasoline was $3.47 per gallon. September silver traded at $19.27 per ounce, while August gold traded at $17.43.

August cattle was $134, while August hogs brought $109.50 per 100 pounds. Compared to last Friday's close the S & P stock index was up about 70 points trading at 3,900 at 1 p.m. Friday.

Answers to last week's commodity quiz

We asked you about the world's largest countries and their exports.

Russia's principal export is crude oil, and the same is true for Canada as well. The U.S. exports crude and refined petroleum products. China sells electronics. Brazil trades large amounts of soybeans and Australia exports chiefly iron ore and coal.

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.