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European Heat Sears Crops
Record breaking European heat and severe drought across Europe have wiped out nearly 9 million metric tons of grain, causing more than $2 billion in farm losses. France is seeing its worst outlook in 50 years with massive corn losses while Germany and other western areas report stunted cob growth and shrinking kernel size. The drought in Spain, Italy and Greece has affected olives, threatening olive oil volumes and pushing up prices.
Hog Prices Head to Fall
Hog prices took out last week's low, tumbling to the lowest price in two months. A decline in Mexican purchases was cited as one of many reasons. U.S. Pork demand has fallen as shoppers look to cheaper alternatives like chicken to combat inflation. Favorable cooler weather and sufficient rainfall have led to hog weight gains, and commodity traders have locked in profits, contributing to short-term downward corrections. Internationally, supply has outpaced demand. A sharp late week tumble in both live fat cattle and smaller feeder cattle added to the downward pressure on hogs as meat-hungry consumers had an alternative to hogs to shop for. Beef is still high compared to pork but not as high as it has been for several weeks.
Wheat Prices Not So Neat
Several factors have contributed to the decline in wheat prices. Ongoing wheat harvests have brought a rush of grain onto the market increasing immediate selling. Recent sharp rallies have left the market overbought. Weakness in the overall grain sector, especially with corn and soybeans, is causing wheat values to drop. High operating and interest costs are pushing growers to sell grain now rather than store it for higher prices. The six-to-ten-day weather forecast showed some relief to the driest wheat-growing regions of the US. Friday saw a sharp rise in wheat prices due to further turmoil in the Black Sea region.
Strait Trips Still Uncertain
With Iran and Oman nearing a complex agreement to reopen the Strait of Hormuz, many issues remain. Primarily, the US government would reject any terms that allow nations to charge tolls or cargo fees, yet the Iran/Oman agreement allows Iran to collect fees. A US naval blockade remains in place, and Strait traffic is low. President Trump still maintains that a deal is close to open the Strait completely.
CME midday prices - November Soybeans, $11.78; September Corn, $4.40; September Wheat, $6.43. Livestock per 100 pounds: October Cattle, $225; October Hogs, $82.20. Metals per troy ounce: December Gold, $4,400; September Silver, $63.61, September Copper per pound: $6.60. September Crude oil per barrel: (WTI) $78. September S&P futures traded at 7768.
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Walt Breitinger is a commodity futures broker in Indiana. He can be reached at 800-411-FUTURES (3888) or www.indianafutures.com.
Pinion Futures, LLC, a CFTC registered Introducing Broker and NFA Member (NFA #0284447,) is a fully owned subsidiary of Pinion Risk Management LLC. Information contained herein is believed to be reliable but cannot be guaranteed as to its accuracy or completeness. Futures and options trading involve substantial risk of loss and is not suitable for all investors.