The decline in oil prices and stock indices in the US will increase pressure on crop prices in the near future

On Friday, oil prices fell to a 2-month low amid a possible decline in energy demand in the United States, as economic reports on jobs and production orders in June were worse than expected, indicating a slowdown in the US economy.

In July, the unemployment rate in the US unexpectedly rose by 0.2% to a 3-year high of 4.3% (with expectations of 4.1%), and production orders in June fell by 3.3% (with expectations of 3.2%), which was the largest drop in the last 4 years.

On the US stock exchanges, the sale of shares, especially of technology companies, accelerated (for example, Intel shares fell by more than 26%), causing the S&P 500 index to fall by 1.84% to an 8-week low, the Nasdaq 100 – by 2.38% to a 2-month low, and the Dow Jones Industrials – by 1.51% to a 3-week low. Experts warned that the growth of stock indices only due to the rise in the price of shares of AI-related companies would be another bubble, so it would take a 25-50% drop to return to the “normal” level of indices.

October futures for Brent crude oil on the London ICE Futures exchange on Friday fell 3.6% to a 2-month low of $76.7 per barrel (-4.7% for the week, -12.9% for the month) on data on the US economy, without responding to the escalation between Iran and Israel. Iran’s promised response may lead to a speculative rise in oil prices in the coming days, but overall, global oil demand continues to decline.

According to S&P Global, in July, Russia reduced its crude oil exports by sea to a 12-month low amid a reduction in the discount on Urals crude oil relative to Brent crude oil to the lowest level since the full-scale invasion and a seasonal drop in demand from Indian refineries.

The decline in oil prices and stock indices in the US will soon increase pressure on crop prices, which are already low.

Tags: grain, prices