Summary:
- Falling gasoline prices amidst recessionary fears.
- Strong wheat supply from top growing regions.
- Platinum prices rising amidst weaker dollar.
Platinum futures recovering from 22-month lows
Following a break in the dollar gain after Fed Chair Jerome Powell suggested the possibility of reducing the pace of interest rate hikes amid contraction in the US economy, platinum futures recovered from a 22-month low that was recorded on July 14th. Foreign investors are enticed to purchase the dollar-denominated commodity by low-cost dollars. As the war in Ukraine rages and the West continues to impose economic sanctions on Russia, shipment interruptions from Russia are anticipated to keep the metal supplies lower. The Russian mining behemoth Nornickel's CEO and largest shareholder, Vladimir Potanin, was subject to sanctions earlier in June by the British government. Nornickel, with a 10% global output share, is the third-largest producer of platinum.
Platinum Oct ‘22 Futures Price Chart
Strong Wheat supply driving prices down
The strongest supply from significant growing regions caused Chicago wheat futures to decline to below $7.5 per bushel in mid-August, the lowest level since January. Following a pact between Russia and Ukraine for secure trade routes to ease the world food shortage, vessels carrying Ukrainian grain continued to operate without incident. It is anticipated that Ukraine will sell more than 20 million tonnes of grain that have reportedly collected in port silos since its invasion began on February 24 in addition to freeing up critical storage space for the next wheat harvest. Concerns over the impact of hot and dry weather on the crop were allayed elsewhere thanks to prospects of rain in the US corn belt. Meanwhile, the USDA raised the world's supplies upward in its most recent WASDE report, boosted by projections for record production in Russia and higher output from China and Australia. US supply projections were also upgraded because strong spring wheat more than made up for declining supplies of winter and durum wheat.
Wheat Futures Price Chart
RBOB Gasoline futures
As a result of lower gas prices weighing on service station receipts, U.S. retail sales surprisingly remained constant in July. However, consumer spending began to pick up at the beginning of the third quarter, allaying concerns the economy was in a recession. However, falling petroleum prices gave consumers more money to spend on other items including furniture, electronics, appliances, building supplies, and gardening tools.
RBOB Gasoline Sep ‘22 Futures Price Chart
Sources: finance.yahoo.com, tradingeconomics.com
