Pleasant weather for new construction has fueled continued demand for lumber. At the same time, wildfires and transportation problems in British Columbia have hurt wood supplies, creating the perfect storm for higher prices. March lumber, which had traded at $500 per thousand board feet at the end of August, exploded to $1,244 on Thursday. Building supply stores may have to pass on their higher costs as builders and do-it-yourselfers compete to buy before prices rise further. Midday Friday lumber for March delivery fetched $1,314 per thousand board feet.
Gas traders on Russia Watch
Natural gas, nitrogen fertilizers and wheat could see wild swings as NATO nations continue to resolve troop buildup along Ukraine border. The Sabor rattling intensified on Thursday as a Russian foreign minister said Moscow could deploy troops to Venezuela or Cuba if tensions with the United States continue. Russia produces natural gas for Europe and can limit the supply according to its political whims. Natural gas is used to make anhydrous ammonia (providing nitrogen to corn), so farmers are particularly interested in any related geopolitical news. March natural gas was trading at $4.05 per 10,000 BTUs.
Cereals are thrown away
Cereals fell sharply on Thursday after Wednesday’s USDA crop report. The report was generally seen as neutral, but prompted selling as much-needed moisture arrived in Argentina and traders liquidated huge positions ahead of Martin Luther King Jr.’s trading holiday. Rising retail and wholesale inflation figures are expected to be bullish for grains, helping farmers secure higher prices. However, fears of a sharp rise in input costs, particularly land and fertilizer, continue to weigh on their hopes for overall profits. The price of anhydrous ammonia, for example, soared to $688 per ton, a significant jump from a year ago. By midday Friday, corn for March delivery was trading at $5.94 a bushel, March wheat was trading at $7.40 and March beans at $13.69. Oats were the biggest percentage loser, losing 60 cents a bushel to $6.08 on Friday.
The inflation rate is skyrocketing
Along with housing costs, cars, gas and food led the way in the latest Labor Department consumer price index released Wednesday morning. Animal proteins and new vehicles are the fastest. The producer price index showed an increase of 9.7% compared to last year.