Here's a look at futures prices on commodities that impact Southern Illinois and the rest of the Midwest.
Wheat market rising
Wheat prices rose to a three-year high this week as traders grew increasingly concerned about drought conditions in the U.S. Great Plains and in northern Europe. Both regions are major producers of the grain, as well as other commodities.
One of the hardest hit areas is Germany, which is facing its smallest wheat crop in almost 15 years. In addition to losing 20 percent of its wheat crop, the nation is also facing large losses of its rye and barley crops, which could force the country into buying foreign grain to make its hearty breads and beers.
Globally, updated estimates are projecting this year’s wheat harvest to be almost 4 percent smaller than last year, which helped to push prices sharply higher. Kansas City hard red wheat futures touched $5.97 per bushel on Thursday, while Chicago soft red wheat futures were close behind, topping out at $5.93.
For U.S. farmers who weren’t devastated by drought, this rally has been a welcome relief, as prices have risen almost 25 percent in the past month.
Gold mines at new low
Gold prices neared $1200 per ounce for the first time since last summer as investors dumped the metal. Gold has been losing its luster as would-be buyers flock to other assets that have been yielding higher returns, like stocks, bonds, and real estate.
This week’s announcement from the Federal Reserve suggested that interest rates were likely to rise again in September, a move that could further hurt demand for gold.
Sugar melts lower
Sugar crumbled to a three-year low on Thursday at 10.37 cents per pound.
The market continues to decline due to a global oversupply of sugar. Sugar beet farmers in the European Union and sugarcane growers in India and Thailand are set to increase production this year. Globally, production is outstripping demand by 10.8 million metric tons, representing an oversupply of almost 6 percent.
Despite the drop in global sugar prices, American consumers won’t see a sweet deal. U.S. sugar prices are substantially higher than the global market due to a system of import restrictions and government price support to sugar producers. This results in U.S. sugar futures trading over 25 cents, while sugar outside the U.S. traded for under 11 cents on Friday.