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Futures Brief: Gas Explosions 50% Higher | Business

Walt Breitinger

Of all the actively traded futures, natural gas and diesel have skyrocketed this year, with natural gas up almost 50% in January alone!

Diesel, virtually the same fuel as heating oil, rose nearly 20% in January.

The price of crude oil is at the heart of these rallies, which, like diesel, rose 20% last month and more than 50% year-over-year.

Every aspect of our economy depends on energy prices. The threat of Russia invading Ukraine and cutting off gas supplies from Russia to Europe is fueling the noticeable spike in natural gas. President Biden deployed 3,000 US troops to Germany and Poland midweek, heightening fears of a military event.

Those watching inflation should realize that food, transportation, housing, manufacturing, clothing, and virtually every other aspect of our economy depends on the price of energy. The state of Iowa, for example, estimates that up to 50% of the cost of growing corn can be attributed to energy expenses. Until energy consumers can switch to using renewable fuels, inflation will continue to be fueled by energy prices.

Natural gas for March delivery fell to $4.52 per million BTU Friday afternoon.

Weather, Chinese Craving Propel Soybeans

Much speculation on the supply side has been created by fears that South American soybean production could be threatened by dry weather, just as China’s appetite for our beans has boosted demand.

Compared to other commodities, the beans rally only came in second behind the energy group mentioned above.

March corn is down about 10 cents this week. March wheat was trading at $7.66 while the highest-flying beans were up 90 cents a bushel, with March beans hitting $15.56 Friday afternoon.

NASDAQ Nosebleed

The bears took control of stock index futures mid-week, with the NASDAQ falling the most. Geopolitical risks, shocking corporate results and fears of rate hikes by the Federal Reserve contributed to strong selling, particularly on Thursday.

Many market watchers now expect the Fed to raise interest rates five or even six times this year, the first hike in mid-March. The March NASDAQ was trading at 14,750 near the close on Friday.

Opinions are solely those of the author. Walt Breitinger is a commodity futures broker at Paragon Investments in Silver Lake, KS. He can be reached at (800) 411-3888 or www.paragoninvestments.com. This is not a solicitation of a market order to buy or sell.