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Cattle market slaughtered

Hollie Newton • Jul 14, 2014 at 1:27 PM

After making an all-time high early Monday morning, cattle prices reversed sharply lower as cattlemen began bringing cattle to the market to capture record high prices. Meanwhile, traders cashed in on huge profits, after riding the market higher for months. As prices dropped, ranchers and traders seemed to succumb to herd behavior, with aggressive selling leading to even more selling.

During the week, prices fell so fast that the Chicago Mercantile Exchange’s limits were triggered multiple times, which prevent prices from dropping more than three cents per day. By Friday, the bloodbath seemed to be slowing down, but left the markets severely wounded, with fat cattle having shed over nine cents per pound and feeders losing nearly twelve cents, finishing near $1.47 and $2.08, respectively.

The bright side of this price drop is for consumers, grocery stores, and restaurants, who may benefit from cheaper beef.

Grains get the Guillotine

Midday Friday, the USDA raised its projections for coming grain surpluses, showing swelling supplies of corn, wheat, and soybeans. Boosted by prospects for extremely large crops this year and tepid demand that will be unable to eat into the supplies, US grain stockpiles could reach the highest level in years.

Going into the report, corn, wheat, and soybean prices were already significantly depressed, and prices sliced lower yet in the wake of the report. By midday Friday, December corn crumbled to $3.84, December wheat withered to $5.52, and November soybeans sank to $10.75 per bushel. Prices for this year’s crops are now at the lowest level since 2010.

Without a major shift in demand or threat to the growing crops, lower prices may become the norm, which would be a disappointment for US farmers and a welcome relief for end users after recent years’ record high prices.

Gold Bulls Awake from Hibernation

The precious metals markets are regaining strength, trading at multi-month highs this week following increased Mideast tensions and an announcement from the Federal Reserve that interest rates are likely to stay low for a while longer. Some investors interpreted the Fed’s inaction as a sign that inflation could pose a risk in the coming months, which led them to buy gold, silver and platinum.

As of midday Friday, an ounce of platinum was worth $1516, gold garnered $1337, and silver stood at $21.50.

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.


Alex Breitinger

Breitinger & Sons, a division of Paragon Investments

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This is not a solicitation of any order to buy or sell, nor does it provide any recommendations in regard to the market.  Information contained herein is believed to be reliable, but cannot be guaranteed as to its accuracy or completeness. Past performance is no guarantee of future results or profitability. Futures and options trading involve substantial risk of loss and is not suitable for all investors. Clients may lose more than their initial investment.

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