Commodities Futures and Options Brokerage

Paragon Commentary

Futures File: Soybeans, Silver & Hogs

Mar 31, 2017

Record Soybeans to be Planted

Soybeans plummeted on Friday following new USDA projections expecting U.S. farmers to plant a record 89.5 million acres of soybeans this year. This news was coupled with relatively high stockpiles of beans, another factor that undercut prices.

In the aftermath of the report, soybeans dropped under $9.50 per bushel for the first time since last fall. Meanwhile, corn and wheat prices held steady as acreage projections for those grains were reduced.

Unlike corn and wheat, crops that U.S. farmers have been growing in abundance since the start of our nation, soybeans are a relatively modern crop. The U.S. government only started tracking production of the legume in 1924, and it wasn’t until the 1970’s that soybeans began to match corn and wheat for agricultural dominance.

The soybean was first grown in China almost 10,000 years ago and is now grown all around the world, prized both for its oil and high protein content, making it a common feed ingredient for livestock.

 

Silver Roars Back

Silver prices have exploded $1.50 per ounce higher during the last two weeks, trading over $18.30 as investors buy the metal.

Analysts expect that President Trump’s combination of higher government spending on military and infrastructure coupled with a promise to lower income taxes could result in an inflationary environment. Higher wages, lower unemployment, and rising housing prices are contributing to these fears, all of which should stimulate speculation in precious metals.

As silver rose, so too did gold, trading over $1260 per ounce earlier this week.

 

Pigs Get Pounded on Big Supplies

On Thursday, the USDA released its Quarterly Hogs & Pigs Report, which showed a national pig herd that was 4% bigger than last year, and a record high for this time of year.

Hog producers are currently expanding operations, often locking in profit margins on the futures markets by pre-selling their expected production.

This news, coupled with weak demand, has knocked hog futures to the lowest level in almost three months, with April futures trading Friday at 65 cents per pound.

Typically, the Easter holiday provides a spark to the market as consumers buy hams, providing hope to some pork producers that prices may rebound in the next two weeks.

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