- NGAS futures are trading close to 14-year highs.
- Decreased supply vs lower demand for cotton.
- Gold futures falling.
Demand for NGAS rising
US Natural Gas futures were trading close to a 14-year high of $9.75/MMBtu reached in late July, supported by robust domestic and international demand. US Natural Gas futures were trading around this price. This summer's high temperatures in the US have been accompanied by many heatwaves, which has increased demand for air conditioners. Freeport LNG, meanwhile, announced that it started bringing in very small amounts of natural gas from pipelines and that it just reached an agreement with authorities to partially restart operations at its shut-down export terminal in Texas in October. More natural gas will be taken out of storage once flows resume, which will increase exports. The fact that the crucial Nord Stream 1 pipeline, which runs from Russia to Germany, is currently operating at 20% capacity just makes matters worse. Demand from Europe is still high.
NGAS Sep ‘22 Futures Price Chart
Cotton prices touching 7-week highs
As traders weighed the chances of decreased supply against those of lower demand, cotton futures increased to levels above 120 USd/Lb, the highest in more than 7 weeks. According to the most recent USDA crop report, production for 2022–2023 will drop to 12.6 million bales, which would mark a decline from 2009–2010 levels. Additionally, the new output prediction is around 19% lower than 2021–2022. In the meantime, severe weather and pest attacks in important growing regions continue to threaten cotton crops in India, another key producer.
Cotton Oct ‘22 Futures Price Chart
Gold Futures weighed down by slowing GDP
Expectations that the Federal Reserve would continue to rapidly raise interest rates despite evidence of softening inflation and slowing GDP caused gold prices to trade around $1,780 an ounce on Tuesday, down 1.3% from the previous session. Richmond Fed Bank President Thomas Barkin stated Friday in the most recent central bank commentary that the Fed will need to keep raising rates into "restrictive terrain" until he sees inflation persistently falling inside the target range for a considerable amount of time. Higher interest rates make owning non-yielding bullion more expensive, despite the fact that gold is regarded as a hedge against inflation and economic uncertainty.
Gold Dec ‘22 Futures Price Chart
Sources: finance.yahoo.com, tradingeconomics.com