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Paragon Commentary

Futures File: Hogs, Copper & Wheat Higher

Jun 30, 2017

Pork Market Smoking

Lean hog futures shot over 90 cents per pound for the first time since 2014, a move that could hit backyard grillers in the gut going into the 4th of July weekend.

Prices have more than doubled over the last eight months as pork exports to foreign buyers have soared, especially to major buyers Mexico and South Korea. There had been concerns that President Trump’s desire to restrict foreign trade could hurt U.S. exports, but for now, global buyers are clamoring for bacon, chops, and ribs.

To meet the rising demand, U.S. hog producers have expanded their herds to record levels and are poised to expand further. Producers continue to increase their number of breeding sows, which are now rearing an average of 10.55 piglets per litter. The rising efficiency of U.S. hog operations has allowed fewer producers to make more pork for an increasingly meat-hungry globe.

 

Copper Streaks Skyward

The red metal has been heating up, trading to a two-month high on Friday morning near $2.70 per pound. Copper prices have been rising on increasing demand from China, the world’s largest copper consumer.

Global supplies were restricted earlier this year by a workers’ strike at the world’s largest copper mine in Chile. Now, workers at the second-largest mine in the world in Indonesia are on strike as well, but the mine is continuing to produce at its normal pace.

As a side note for fireworks enthusiasts, copper is the metal used in the brilliant blue explosions you may enjoy this week.

 

Wheat Springs to New High

Prices for wheat continued exploding higher this week, led by Minneapolis spring wheat, which hit a three-year high on Friday.

The spring wheat crop is especially threatened by widespread drought in the northern Great Plains, where that wheat is predominantly planted. Temperatures next week could soar over 100 degrees in North Dakota, exacerbating crop stress in the largest spring wheat producing state.

On Friday morning, the USDA released its most recent data on U.S. crop plantings this year, which showed substantially less spring wheat planted than expected.

Minneapolis wheat is especially prized for its protein content, and threats to this year’s production are giving that crop an increasingly large premium over the Kansas City and Chicago wheat contracts. As of midday Friday, Minneapolis wheat traded as high as $7.80 per bushel, while KC and Chicago wheat topped out near $5.10.

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