Weekly commodity wrap-up

Cattle explode at record pace

In one of the fastest price increases in the history of cattle futures trading, June cattle gained more than $1.00 per hour on Thursday, plus made new contract highs all five days in a row. Younger and lighter feeder cattle made all-time record highs, hinting that plenty of extreme buying may be on the way for the meat complex. A severe shortage of cattle and lighter weights in the “cash” market portends higher beef prices just as we enter the high demand grilling season for North Americans. The cattle shortage has been a response to the over three-year drought in the Southwest. Rising feed costs and availability of alfalfa, hay, and even corn, approached zero in some areas just as pastures for grazing became parched. Some supermarkets are switching shelf space from beef to chicken and pork, since steaks are now skyrocketing in price and consumers are looking for alternatives.

Corn and beans in the ground, farmers wait

As of last week, 92% of corn and 83% of the U.S. soybean crops have been planted. Both figures are ahead of last year, and ahead of the 5 year average. The dry weather in most of the corn belt has allowed planting to move ahead quickly, and the condition of both crops looks good so far. Farmers and investors are watching the 10 day forecast, which continues to dry down with warm temperatures. While it’s too early to predict the average weather for the belt, or detect a major change in either direction, all eyes are peeled for any signs of drought.

The cheap price of Brazilian beans and wheat from Europe has hurt the demand side of our U.S. grain formula. Reports of actual imports of wheat from Poland and beans from Brazil into the U.S. demonstrate the competition our producers face.

House And Senate pass spending/debt limit bill

Stock index futures rose in the two late night sessions, as the House of Representatives, and then the Senate, agreed on legislation to suspend our debt ceiling, cut Federal spending and avoid a threatened default on U.S. debt.

Weekly winners and losers

Cattle, hogs, cotton, and the Canadian dollar were among the upside leaders for the week. June cattle settled at $176.40 per hundred pounds, and hogs at $86.72. Grains, crude oil, and metals were mixed to higher, while natural gas and coffee were lower.

Opinions are solely the writer’s. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.