Futures File: Natural gas heats up

Reduced U.S. output, increased demand for liquefied natural gas (LNG) from foreign customers, and colder temps in the northeast U.

S. combined to send natural gas futures to the highest level since July 1st. LNG supplies have been reduced by plant outages and construction slowdowns due to labor shortages.



Two weeks of substantial drawdowns in gas inventory stimulated the buying. Major news outlets are reporting the first severe human bird flu case in the U.S.

A 65 year-old man was hospitalized with a case of H5N1 bird flu according to the US Centers for Disease Control and Prevention. The person was said to have been exposed to dead and infected birds on his property. Sixty-one previous human cases, which have been mild in nature, have been associated with sick farm poultry and dairy cows.

California’s governor has issued a state of emergency as the disease has spread through dairy cattle in that state. The disease affects not only poultry prices but also pork and beef prices as consumers change their food choices. Experts are predicting that coffee prices will continue to rise going forward.

Natural disasters like the droughts in Brazil and the typhoon in Vietnam have disrupted crops. Continual climate change and weather pattern changes make growth and harvesting more difficult. Increased demand in emerging markets like Asia will add to price increases worldwide.

Regulations, such as the EU’s effort, require companies to prove that coffee growth is deforestation free in order to sell the product in Europe. Also, labor costs are up and continued supply chain issues like container shortages add to costs. All of these issues lead some to say that prices will rise for several years.

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