Fuel Price’s Effect On Commodities

Crude oil continues to work sideways and is staying in its wedge formation. Seasonally, we tend to put in another low in the July timeframe. This will be another time to watch in order to add to or cover our fall needs.

Keep in mind, with all the rhetoric in the media about $3 gas this summer, the market appears to have a major top in. Take natural gas. The market has already retraced 75% of the two year bull market. We would expect some of the other liquid energies to still have more downside potential similar to this.

One of the other major influences on commodities is the U.S. dollar. It is continuing to try and renew the uptrend. Follow through action only hurts our exchange rate and makes our grain more expensive for export.

This seems almost a non-event to us domestically, but the excess bushels that are exported keeps demand high causing prices to rally. The dollar is about 14% higher; coincidentally this is about the percentage drop in corn.

You can e-mail Moe at mrussell@netins.net

Editors' note: Moe Russell, Soybean Digest Risk Management Editor, is president of Russell Consulting Group, a farm management agency in Panora, IA.

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