The Journal Gazette
 
 
Friday, May 14, 2021 2:12 pm

Column: Commodities boom or bubble?

WALT BREITINGER | Breitinger & Sons LLC

The Department of Labor released its closely watched Consumer Price Index for April, which jumped 4.2% -- the biggest in any 12-month period since 2008.

The core price index, which does not include the volatile components of food or energy, was up 0.9% compared to March. Up until now, March had been the largest single-month jump since 1981. Labor costs and housing prices continue to rise at record paces.

China’s National Bureau of Labor statistics added fuel to the fire by reporting their prices rose the most in 3 1/2 years.

The ending of the pandemic and the accompanying stimulus, weather and climate concerns; shortages of copper, lumber, bicycles and computer chips; political threats to the supply chain; and trade wars all contribute to the buying frenzy. But is this a bubble waiting to deflate as it did in 2008, or will the prices of everything become even more volatile in both directions without a clear either up or down? Stay tuned.

June gold traded at $1,839 per ounce at midday Friday, whereas July copper brought $4.66 per pound, July corn $6.60 per bushel and July soybeans $15.90.

Pipeline hacked, gas prices on roller-coaster

People in fear of gasoline shortages hoarded fuel this week in unsuitable containers ranging from storage bins to plastic grocery bags. Impending shortages spurred the panic buying after a cyber-attack shut down a major pipeline, and felt reminiscent of Americans taking more than their fair share of toilet paper at the beginning of the COVID-19 pandemic. As a result, gas stations all along the East Coast were run down to empty.

Colonial Pipeline transports about 45% of the fuel used on the East Coast, with a pipeline running from Texas to New Jersey. Perhaps that’s the reason it was the target of a ransomware attack U.S. officials said came from an Eastern European gang called DarkSide.

The national average price of retail gasoline went up more than 2 cents a gallon because of it. Thursday saw a swift turn-around in gasoline prices to the downside as portions of the pipeline reopened.

Reformulated gasoline for June delivery (without taxes and costs associated with retail prices) traded at $2.11 per gallon toward Friday’s close, virtually unchanged from last Friday.

Walt Breitinger is a commodity futures broker in Valparaiso. He can be reached at (800) 411-3888 or www.paragoninvestments.com. This is not a solicitation of any order to buy or sell any market.


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