Gas prices are starting to climb again, hitting drivers at the pump. After dropping to a three-year low recently, prices rebounded by over 30 cents per gallon.
Oil prices have been climbing as well, pulled higher by concerns that U.S. sanctions on Venezuela are restricting that nation’s exports. Venezuela is an OPEC member and was once the world’s second-largest oil producer. Political unrest and economic collapse have reduced its production capacity and recent sanctions have slowed the flow of oil to U.S. refineries.
If an alternate source isn’t procured quickly, some U.S. refineries could be forced to reduce their output of gasoline and diesel, creating supply tightness of the fuels.
These concerns pushed gasoline futures near $1.57 per gallon this week, a wholesale price that excludes taxes and transportation costs. Meanwhile, crude oil futures jumped to $55.50 on Friday, near a three-month high.
Coffee drips lower
Coffee prices continued to decline this week, with March futures contracts falling below $1.00 per pound. The global market is facing large supplies of coffee beans, and good weather in top-producer Brazil is keeping pressure on prices.
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Worse yet, Brazil’s currency, the real, has been declining in value, which makes Brazilian coffee even cheaper, pulling global prices lower.
For Americans with a caffeine habit, these lower prices sound great. The discounts may not extend much further, as prices have bottomed out near 95 cents per pound twice during the last year already, setting up a potential opportunity for would-be buyers.
Wheat market withers
Wheat prices fell to a two-month low this week, with the benchmark Kansas City wheat contract falling to $4.72 per bushel on Friday.
Prices are under attack due to foreign competition, which is hurting U.S. farmers’ ability to sell their grain abroad. Normally, a third of American wheat is sold to foreign buyers, but exports have been slow this year, bottling up grain. Our biggest competition comes from Russia, Ukraine, and other Former Soviet Union nations; their wheat has been consistently cheaper than U.S. wheat, forcing our farmers to sell at lower and lower prices.
Worse yet, the U.S. Department of Agriculture expects global wheat production to rise by nearly 5% next year, which could mean that lower prices could be baked in for a while.