Crude oil prices spurted higher on Wednesday night after Saudi Arabia and its allies launched air strikes against rebel forces in neighboring Yemen. The rebels, who have been receiving support from Iran, have captured most of Yemen’s major cities and ousted the president. With Saudi Arabia’s intervention, some worry that the civil war in Yemen could become a proxy war between Iranian-backed Shiite rebels and the Saudi-backed Sunni government.
Although Yemen itself is a modest oil producer, escalating tensions in the Middle East could disrupt global oil production, as Yemen is strategically located on the Red Sea, a major passageway for crude oil travelling toward the Suez Canal. These fears led to the rapid $5 per barrel rally midweek.
As traders reassessed the threats and considered the global supply glut, prices gave up half their gains, trading Friday for $50.11.
Orange Juice Shines Higher
Frozen concentrated orange juice futures staged the biggest one-week rally in over a decade, climbing nearly 25 cents per frozen pound (+23%) in just a few trading sessions.
For months, traders had been betting against OJ, expecting prices to decline as Americans shift away from a daily glass of orange juice. Meanwhile, a stronger US dollar had been prompting rising exports from Brazil, the world’s largest orange producer, which helped push prices to a two-year low recently.
Low prices and fear about smaller supply from Florida due to dry conditions and an ongoing citrus-greening disease sparked buying this week, leading to a rip-roaring rally that brought prices to $1.27 per pound on Friday.
Weedkiller under Fire
The World Health Organization (WHO) recently released a study highlighting potential dangers of the world’s most widely used herbicide, glyphosate. Commonly known as Roundup, the weedkiller is used in most large-scale corn and soybean production in the United States, where crops have been genetically modified to survive the application of the herbicide. The WHO has cited the chemical as “probably carcinogenic to humans” potentially posing risks to those that come into direct contact with glyphosate, including farmers who apply it to their fields.
Although the US Environmental Agency considers the herbicide to be safe, shifting perceptions could lead to a massive shakeup in the agricultural industry given its widespread use.
So far, the corn and soybean markets have not shown a significant reaction, trading Friday for $3.90 and $9.67 per bushel, respectively, ahead of a major acreage report from the USDA on Tuesday.