The crisis in Ukraine deepened this week as the Crimean region prepared for a referendum on Sunday about whether to break away from the rest of Ukraine.
The vote could lead to a standoff between Russian President Vladimir Putin and Western leaders, who have declared the referendum illegal.
In expectation of potential trade wars, or even an armed conflict, commodities traders are stockpiling resources that could be cut off, such as wheat; both Russia and Ukraine are major suppliers of wheat to the rest of the world.
Wheat prices gained nearly 50 cents, trading Friday at $6.91 per bushel.
Meanwhile, global investors took part in a “flight to quality” where they purchased assets that they perceived as safe, such as gold. During the week, gold gained more than $50 per ounce, reaching $1,388 on Friday, the highest price in six months.
Crude oil slips lower
Some traders had expected crude oil prices to rally this week, since Russia is one of the world’s largest oil drillers.
Instead, prices dropped after the United States announced Wednesday that it would release 5 million barrels from its Strategic Petroleum Reserve, a government stockpile of nearly 750 million barrels that the U.S. holds for emergency purposes.
The release this week was heralded as a signal that the U.S. stands ready to buffer the effect of the Crimean crisis.
In the wake of the announcement, crude fell to a five-week low of $97.55 per barrel.
Some analysts point out that crude oil is another weapon the U.S. wields against Russia, since that country is dependent on oil income. If prices drop, Russia’s economy could suffer.
Hog rally goes viral
Pork prices reached another all-time high this week as reports of the deadly PED virus continued to spread, with outbreaks now reported in 27 states.
The disease, almost always fatal to piglets, is sharply reducing the number of market-ready hogs that will be available in coming months.
As scientists continue to study the extent of the disease and its effect on the U.S. pork supply, prices keep rising, gaining more than 30 percent during the last two months. On Friday morning, April hogs traded near $1.20 per pound.
Walt Breitinger is a commodity futures broker in Valparaiso. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.