Trump’s trade deal boosted crude, ethanol and cattle
In addition to tech stocks, crude oil and ethanol saw the sharpest rise on Thursday as President Trump announced that lower tariffs would be imposed on the U.K. and that they would, in turn, begin buying fuel ethanol from the U.S.
The rally in crude continued through Friday on optimism that other trade deals and economies would benefit from progress made in Great Britain. Planned tariff negotiations in Switzerland between the U.S. and China provide major issues to be resolved if the U.K. optimism is to prevail.
The gold market, which dropped sharply on Thursday’s announcements, rallied on Friday indicating a cautious stance is being taken by central banks as large outflows from Comex stockpiles and commercial vaults are occurring.
Cattle jump to historic highs
Cattle for June delivery blasted more than $2.14 per pound on Thursday as the shortage of market-ready animals and cheap grain caused ranchers to hold their stock back and watch the price aim for the moon. Beef production was down 7% again this week and cattle producers saw no reason to give-up their 4-legged friends this early during the barbecue demand season.
Trump’s trade deal with the U.K., announced Thursday, put the icing on the steak since the Brits had been closed to U.S. beef but will open agricultural markets with beef and ethanol being the main beneficiaries. Cattle continued higher on Friday but hogs couldn’t stand the heights and fell back to $97.50 by midday Friday.
Grain traders waiting for USDA report
Farmers, grain processors and investors stayed mostly on the sidelines awaiting the results of the USDA report slated for release on Monday that will outline the stockpiles, supplies and demand of soybeans, wheat and corn. Once that data is released, most analysts will turn to weather, especially rain forecasts, to weigh along with tariff news to decide how to market the crops they are planting in North America.
Wars can also bomb the economy
The economic impacts of the Indian-Pakistani conflict are still uncertain as the world waits to see the duration of the hostilities between these nuclear capable neighbors.
But, perhaps, a more in depth view of economic effects can be seen as Russian invasion of Ukraine moves past three years. In Ukraine, poverty has risen 1.8 million to 9 million. The country will need $524 billion in the next decade to repair and rebuild, 2.8 times its GDP for 2024. Reconstruction costs for just commerce, industry and agriculture will total $119 billion.
The country is a leading producer of wheat, corn and barley as well as oil seeds and sunflower oil. It is rich in ferrous metal production and rare earth metals, but employee shortages and non-functioning ports have stifled productivity even as a recent deal with the U.S. for rare metals has been completed.
For Russia, the predicted oil gluts for the next five years will seriously damage its war export economy. Russia faces falling current-accounts surplus, rising inflation, high interest rates and a banking system under strain while financing the war. On the other hand, Ukraine’s stronger economic position rests upon its dependence on foreign aid to finance the battle.
CME midday prices: Price per bushel: July Soybeans, $10.56; July Corn, $4.51; July Wheat, $5.25. June Livestock per 100 pounds: Cattle, $214.50; Hogs, $97.50. Metals per troy ounce: June Gold, $3,345; July Silver, $32.86. July Copper per pound: $4.65. June Crude oil per barrel: $60.80. The June S&P futures contract is trading at 5672.00.
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