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Paragon Commentary

Futures File: Grains, Cattle & Silver

Mar 04, 2019

Grains Lower, Vexing Farmers

Corn and wheat prices collapsed to new lows this week, disappointing farmers.

Corn was especially damaged by a lack of a trade deal with China. That market had been hoping for increased corn and ethanol exports to China, but with no agreement so far, prices dropped to $3.58 per bushel on Friday, a three-month low.

Meanwhile, disappointing U.S. wheat exports have pulled Kansas City wheat futures to a one-year low at $4.32 per bushel.

Longer term, market watchers expect that prices could rebound if exports pick up, or if this winter’s harsh weather leads to a cool, wet spring that slows spring planting and damages plants.

 

Cattle Markets Gain

Falling grain prices are typically seen as a bad thing for farmers, but livestock producers celebrate cheaper grains, since low-cost feed makes their operations more profitable.

Better yet, cattle prices have been exploding higher, adding to profit margins for beef producers. Cattle prices popped to a one-year high on Friday over $1.30 per pound after a U.S. Department of Agriculture report showed that the national cattle herd has barely grown during the last year, despite a rise in beef demand.

These factors could create a shortfall in the beef market in the coming months, coinciding with high grilling demand, which could make backyard barbecues especially pricey this summer.

 

 

Silver gets Slammed on Profit Taking

Precious metals, heretofore one of the strongest asset groups this calendar year, got hammered downward on Friday in a quick mass of selling led by silver.

A drop in crude oil and strength in the U.S. dollar contributed to the easy decision by investors to cash in their silver chips following a two dollar per ounce rise which began around Thanksgiving.

Gold, platinum, and even copper joined the fray as traders scrambled to grab any profits they still had left.

Longer term, our massive federal debt, geopolitical tensions, including China, North Korea, and Russia could re-emerge to stimulate flight-to-quality buying. Recent signals that the Federal Reserve will back off from tightening interest rates could also be supportive to the bullish case.

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