The highest inflation rate in over ten years was announced Wednesday by the U.S. Labor Department. Natural gas, unleaded gasoline, heating oil, rising wages, new cars, housing costs, and groceries were among the factors that drove the September Consumer Price Index up 5.4 percent compared to last year’s inflation estimate.
Liquid Fuels Catch Fire
Although all energy prices have been rising, liquid fuels, such as November delivery unleaded gasoline, diesel, and crude oil, were the biggest movers. November unleaded was up about 9 cents per gallon at $2.47 compared to last Friday’s close. Unleaded futures prices do not include taxes and transportation costs.
Peddle to the Metal
Precious metals traders were quick to spot the trend and seized their piece of the action on Wednesday morning and continued to stock up Thursday. Friday, however, saw liquidation and the sharp rally fizzle out, leaving gold only $6 higher on the week. As of midday Friday, December gold traded at $1,768, while December silver brought $23.34 per ounce.
Corn Pops Late, Soy Sags, Bounces Back
On Tuesday, the USDA estimated the size of the 2021 corn and bean crops are larger than expected, which stalled any strength seen in our ag sector. Wheat also withered downward, and hogs tumbled all week. Sugar, cocoa, and orange juice also declined. Coffee held steady. Cattle were the only major agricultural market to gain momentum to the upside.
Corn, wheat, and beans, though late to the party, gained ground Friday as healthy exports numbers charged a recovery. Mexico and Costa Rica were big buyers of U.S. corn, China and Egypt bought beans, and Ecuador was a customer for our soybean meal. Corn for December delivery traded at $5.28 a bushel, November beans at $12.18, while December Chicago wheat was at $7.35.
Housing Commodities Bolstered by Demand
Supply snags, transportation issues, and the fires in California combined to drive lumber and copper sharply higher all week. Copper is used throughout our industrial/commercial economy but has seen additional demand from new housing and solar components. Although anticipated for years, higher long-term interest rates are finally becoming a threat to the housing boom.
December copper traded at $4.72 per pound, and lumber prices brought $756 per thousand board feet.