Skip to main content
You have permission to edit this article.
Edit
Walt Breitinger: Arctic temps impacting natural gas prices
Column | Futures File

Walt Breitinger: Arctic temps impacting natural gas prices

  • Updated
  • 0
{{featured_button_text}}

Here's a look at futures prices on commodities that impact Southern Illinois and the rest of the Midwest.

My virus valentine

You might not think of plants growing in distant lands when you’re wooing your Valentine, but farmers are likely thinking of you. The cacao tree is a robust crop for the Ivory Coast and Ghana. So strong that together, they produce about two-thirds of the world’s cocoa. And we like cocoa: It’s a necessary ingredient for one of American’s favorite sweets. Chocolate, much like coffee, tends to be produced by developing countries and consumed by wealthier ones. Both the Ivory Coast and Ghana raised their prices near the end of last year to address poverty among farmers. Chocolate, made from cocoa, sugar, and sometimes milk, is bought more in February than most other months.

Valentine’s Day is also historically a big revenue draw for restaurants, but that may change this year because of COVID. Still, the tradition of gifting chocolate to your sweetheart might remain healthy since it can be enjoyed while socially distancing. So how will restaurants and the cocoa market fare this Valentine’s Day? Stay tuned. As of Friday, at noon, cocoa for March delivery traded at $2,435 per tonne, March sugar traded at 16.35 cents per pound, and March milk changed hands at per 16.75 cents per pound.

Baby, it’s cold outside 

No single factor determines natural gas prices more than temperature. And the Midwest and East Coast got hit with an arctic blast as the jet stream shifted south. Gas for March delivery spiked up to $3.04 on Thursday, barely missing the previous high of $3.05. Heating oil, too, rose in demand but is still declining in popularity overall, much like coal and wood have been replaced with natural gas.

Demand for other commodities also impacted by temperature includes coffee, cotton, wool, and lumber. On the production side, weather can threaten livestock, especially cattle, which are kept and transported outdoors. Like all mammals, cattle burn calories staying warm, and therefore gain less weight in frigid conditions.

Winter wheat — now in its dormant stage — could be threatened by temperature swings that can occur during winter and early spring. Rapid thawing and refreezing can shear tender sprouts and dramatically reduce yield.

As of Friday, midday, March natural gas traded at $2.88 per million BTUs, about the same as last Friday’s close, whereas heating oil sold at $1.75 per gallon, up about 3 cents from last week.

Walt Breitinger is a commodity future broker in Valparaiso, Indiana, and the opinions here are solely the writer's. 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.

0
0
0
0
0

The business news you need

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

Get up-to-the-minute news sent straight to your device.

Topics

News Alerts

Breaking News