Drought Scorches America’s Crops: Elements by David Fickling

By David Fickling

The most obvious variation is how different farm commodities are responding to the dry weather that has swept the US. Even heat tolerant strains of wheat, soybeans and corn struggle to produce adequate yields in conditions like these, with 39% of the country in the grip of moderate to exceptional drought.

The worst of this weather has been a long way west of the Mississippi, in land less crucial to the major commodity crops, but in the Midwest grain belt the differences are clear. Corn prices are up 8.4% over the past month, a reflection of the grim weather that has dismayed field scouts touring the area in recent weeks. Over the same period, soybean prices have actually fallen 1.4%. That’s in part a reflection of the fact that soy handles dry weather better; some of corn’s wild ancestors thrive in completely waterlogged soils that would kill many other crops.

In most of the world, steel rebar — the rough rods used to reinforce concrete — will always be cheaper than the higher-quality metal that’s rolled into coils and turned into sheets for car panels, appliances, and low-performance piping. Those rules don’t always apply in China, however. Whenever the private sector steel struggles, it’s rebar that outperforms, since so much of it is used in the sort of large-scale infrastructure projects that Beijing uses to stoke demand. That’s happening again now — an indicator of  government support for the economy.

German power for next year, the European benchmark price, broke through 1,000 euros ($993) for the first time as the region’s energy crisis intensifies. A year ago, it was less than 100 euros.Germany’s economy minister, meanwhile,  proposed tackling soaring energy costs over the longer term by reforming power markets so that prices are no longer coupled to the most expensive supplier.

Gold  dropped for a second day after Federal Reserve Chair Jerome Powell pushed back against hopes the US central bank would start easing monetary policy soon

• Iceberg Research, the whistleblower and short seller, which first raised issues with the accounting of  commodity trader Noble Group Ltd. in 2015, compares Singapore’s lenient treatment of the company unfavorably with the criminal charges brought against directors of Enron Corp. and Wirecard AG.

• Municipal waste, farm residue and recycled plastic could produce 20 million barrels a day of biofuels by 2050, equivalent to a quarter of projected liquid fuel demand, argues Wood Mackenzie.

• A Wall Street Journal video tears down a typical electric vehicle battery to show how hard it will be for the US to bring production of the cells back home, as intended by the Inflation Reduction Act.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.