Back to the Futures: Precious metals shine, more pigs than planned and soybean boost

Published: April 4 2014 | 1:00 pm - Updated: 7 April 2014 | 3:11 pm in

[Editor's note: Every Friday visit the Business 380 for "Back to the Futures," a quick discussion of the week's grain, livestock, gasoline prices and other topics.]

Precious metals shine

Gold, silver, and platinum rallied sharply all week, trading Friday at one-week highs. A drop in the US stock market, the resignation of a “hawkish” Federal Reserve Governor, and news that the Iraqi Central Bank has been accumulating over 60 tons of gold may have been contributing factors. Platinum’s extraordinary strength was stimulated by ongoing labor unrest in South Africa, the world’s largest platinum miner.

Industrial copper, unlike the precious metals, took a tumble on concerns that the employment picture may not look as bright as economists had expected and reduced concerns that an earthquake in Chile could delay copper production from that nation.

At noon Friday, nearby gold futures traded at $1305 per ounce, silver at $20.05, platinum at $ 1448, while the less valuable copper traded for $3.02 per pound.

More pigs than planned

Although there has been substantial focus on the PED virus killing off as many as 5 million baby pigs in recent months, a new USDA report suggested that the hog supply might not be as tight as feared. The US Department of Agriculture’s quarterly Hogs & Pigs Report showed that the US herd stood at its lowest level in seven years, just under 63 million head. Although this is a 3 percent drop from last year, the figure was well above most analysts’ expectations for a national herd of just 61.5 million animals.

Although the report did not show any resolution to the PED virus crisis, it did imply that fears may be overblown, causing a steep sell-off this week. June lean hogs fell a staggering eight cents per pound, including a “limit down” move Friday, when hogs fell the exchange-maximum three cents in one day.

Bean bounce gives farmers boost

Soybeans pushed into new high ground this week, nearing $15 per bushel. Despite a large harvest last fall, prices have been gaining this year due to short-term supply tightness.

Longer-term, some analysts warn that an upcoming record-breaking US soybean crop and waning Chinese bean demand could hurt prices, making recent highs especially tempting for farmers who are still holding onto their crop from last year. Soybeans haven’t been worth near $15 per bushel since last summer and futures markets are already predicting sharply lower prices in the coming months.

As of midday Friday, beans for delivery in May was worth $14.75, while the “new crop” November beans traded for $12.05.

Opinions are solely the writer's. Walt Breitinger is a commodity futures broker with Paragon Investments in Silver Lake, KS. 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.

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