Weekly commodity wrap-up

Cattle: Frozen and Mad

Cattle in the world’s two largest producing nations are in crises and, therefore, for the world’s largest beef importer as well. The latest U.S. blizzard is escalating the cattle shortage. Unlike hogs, chickens, and the humans who eat them, beef cattle cannot seek shelter to fatten up or even survive, as they are raised outdoors. Extreme conditions threaten our current most prized protein source since cold temperatures make giving birth, gaining the weight needed for sale, and even keeping water unfrozen difficult. The drought in our western states has caused a multi-year shortage of cattle and subsequent shortage of feed and water.

Compounding the problem, beef exports from Brazil, the world’s largest exporter, were halted this week because of the discovery of Bovine Spongiform Encephalopathy (BSE), commonly known as the mad cow disease. China—the largest beef importing country—is banning importing Brazilian cattle because of it. The ban will probably increase demand and exports of U.S. cattle, hogs, and poultry, possibly to China. BSE is not contagious to humans, and it is not present in the U.S.

Feeder cattle (cattle under 1,000 pounds) saw the biggest market reaction, jumping two cents per pound on Thursday as the blizzard and mad cow export ban hit the news. Simultaneously, bird flu (avian influenza) is another pressure point for the markets, since millions of birds are being culled each week in order to prevent the spread of that malady.

China to Support Russia?

Just as this week marked the anniversary of Russia’s invasion of Ukraine, reports swirled of Chinese planning—or at least hinting at—military support of Putin’s agenda. Chinese President Xi made multiple references to the war and alluded to the possibility of aiding Russia in Putin’s commitment to pursuing further military invasions. China abstained from joining 141 other United Nations members in condemning Russia, just as the U.S. plans to move more troops into Taiwan. All eyes from our financial and agricultural communities remain glued to any developments, while leaders Biden, Xi, Putin, and U.S. allies ponder, deliberate, and negotiate.

Weekly winners and losers

OJ was up almost 22 cents going for $2.53 per pound. Feeder cattle up roughly 4 cents per pound, going for $1.9325 per pound. Losers are wheat down 60 cents with May wheat going for $7.20 per bushel. The Dow Jones futures down 600 points trading at 32,700. Tumbling metals included silver down over 80 cents per ounce trading at $20.93, copper down nearly 20 cents at $3.96 per pound.

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.