Weekly commodity wrap-up

Beef prices march higher

November feeder cattle futures rallied to $2.60 per pound this week reaching new all-time highs. The cattle herd has been consistently shrinking the past few years due primarily to droughts and tough weather conditions, along with a myriad of other reasons. This ever-shrinking supply has fed a cash cattle/futures market a steady diet of bullish data to keep prices climbing for the better part of two years.

However, the ability of beef prices to continue to soar at the grocery store in the past year, while pork and poultry prices have not, might be the most impressive feat.

A new research study out this week claims that 12% of Americans are responsible for eating half of all beef consumed on any given day. The study was conducted by Tulane University.

Studies like this can be deceiving especially in today’s age where any surprising news should be questioned and examined with a closer eye before taking it as gospel.

However, if we do take it at face value it might help explain the ability of beef on the board of trade and at the grocery store to maintain a historically wide premium to the pork sector for an extended amount of time that has never been seen before.

If 12% of Americans are responsible for half of the beef consumption, it’s likely they are the kind of dedicated fans who are not going to change their consumption habits to a large degree if they have the money to spend, giving the cattle market a heavier portion of inelastic demand than what some might have considered possible.

U.S. dollar delights

The U.S. economy continues to be the cleanest dirty shirt in the world closet when it comes to betting on currencies. The U.S. September dollar index rallied to 105.000 on the board this week, levels not seen since March. That move came as stock market indices were much weaker across the board before recovering on Friday to keep the week from being a major loss.

Weeks like this will keep traders guessing.

Have a comment or question? Please reach out to derrick.hermesch@pinion.global.com.

Opinions are solely the writer’s. Derrick Hermesch is a commodity futures broker with Pinion. He can be reached at 785-338-9605. This is not a solicitation of any order to buy or sell nor does it provide any recommendations in regard to the market. Information contained herein is believed to be reliable but cannot be guaranteed as to its accuracy or completeness. Past performance is no guarantee of future results or profitability. Futures and options trading involve substantial risk of loss and is not suitable for all investors.