Beef slices higher
Cattle futures charged over $1.30 per pound this week, reaching a 12-month high. Cattle are rallying as steer weights decline and beef export sales continue to boom.
Alongside rising beef prices, cattle producers received more great news this week as corn prices fell near a six-month low. Cattle are predominantly fattened up on a diet of corn, making grain costs a major concern for producers.
This week’s drop, combined with the rise in cattle futures, are creating significantly larger profit margins for cattlemen. Using the futures markets, they are able to lock in these profits by buying corn and pre-selling their cattle.
The market was especially active Friday as ranchers, meatpackers, and traders positioned themselves ahead of the USDA’s monthly Cattle on Feed Report, which was released after the market closed. This means that prices could have a sharp move when trading resumes Monday.
Even as beef prices exploded, pork prices collapsed, with June hog futures falling to the lowest price since October, trading Friday for 68 cents per pound.
For shoppers looking ahead to grilling season, this means that pork chops might present an appealingly cheap alternative to steaks.
Oil prices suffered the largest one-day drop in over six weeks, falling $2 per barrel on Wednesday. Oil prices are falling as nationwide petroleum supplies are rising.
Despite large U.S. energy stock piles, the global supply situation could give the market strength; OPEC announced this week that it would extend its production cuts, which took 1.2 million barrels of oil per day out of supply.
As oil slid, so too did gasoline and diesel fuel, which each lost about five cents per gallon this week.
Chocolate prices grow tempting
The price of cocoa, the commodity from which chocolate is made, spilled down to 10-year low this week as a sharp rise in the British pound made prices much cheaper in U.S. dollars.
Economic problems in the Ivory Coast (the world’s largest producer) and the approaching harvest of Brazilian Cocoa (No. 2 largest producer) contributed to the glut which is driving prices down to bargain levels for chocolate and candy makers.
The price of coffee, generally grown and exported from the same regions as cocoa, also took a tumble adding to the chance that both breakfast beverages will be discounted at your favorite café.
Opinions are solely the writers’. Walt and Alex Breitinger are commodity futures brokers with Paragon Investments in Silver Lake, Kan. They can be reached at (800) 411-3888 or www.paragoninvestments.com. This is not a solicitation of any order to buy or sell any market.