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Column | Futures File

Walt Breitinger: Lumber goes viral, Gas traders on Russia watch

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Pleasant weather for new construction fueled the continued demand for lumber. At the same time, forest fires and transportation problems in British Columbia hurt lumber supply, creating the perfect storm for higher prices. March lumber, which had traded as low as $500.00 per thousand board feet in late August, blasted to $1,244.00 on Thursday. Building supply stores may have to pass their higher costs on as builders and do-it-yourselfers compete to buy before prices escalate further. Midday Friday, Lumber for March delivery brought $1,314 per thousand board feet.

Gas traders on Russia watch

Natural gas, nitrogen fertilizer, and wheat could be in for wild swings as NATO nations continue to resolve the build-up of troops along the Ukrainian border. Sabor rattling increased Thursday as a Russian foreign minister stated Moscow might deploy troops to Venezuela or Cuba if tensions with the U.S. continue. Russia produces natural gas for Europe and can throttle supply at their political whim. Natural gas is used to make anhydrous ammonia (providing nitrogen for corn), so farmers are especially interested in any related geopolitical news. March natural gas traded $4.05 per 10,000 BTU.

Grains get dumped

Grains fell sharply Thursday following Wednesday’s USDA crop report. The report was generally perceived as neutral but prompted selling as much-needed moisture arrived in Argentina and traders liquidated huge positions ahead of the Martin Luther King exchange holiday. Rising inflation numbers at retail and wholesale levels should be bullish for grains, helping farmers fetch higher prices. However, fears of a sharp rise in input costs, especially land and fertilizer, continue to plague their hopes of overall profits. The price of anhydrous ammonia, for example, has climbed to $688 per ton, a big jump compared to last year. As of midday Friday, corn for March delivery traded at $5.94 per bushel, March wheat brought $7.40, and March beans were at $13.69. Oats were the biggest percentage loser, dropping 60 cents per bushel at $6.08 by Friday.

Inflation rate roars skyward

In addition to housing costs, cars, gas, and food led the way up in the latest Department of Labor’s Consumer Price Index released Wednesday morning. Animal proteins and new vehicles raced up the fastest. The Producer Price Index indicated a 9.7% increase compared to last year.

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