Commodities Wrap-up

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Oct 21, 2013

 

Cattle Spooked by Shutdown

With the government open for business again, cattle traders are anxiously awaiting the monthly Cattle on Feed report which will give an update on the state of the national herd. The report was originally slated to be released on October 18, but will be delayed by nearly two weeks due to the government shutdown, coming out on Halloween instead. Numerous other agricultural and economic reports have been cancelled or delayed, limiting market information to commodities market participants.

Without fresh government data, beef prices moved wildly, surging near record highs on Thursday before falling sharply to close lower on the week.

Oats Bounce after Harvest

Oats prices fell near $3.00 per bushel in September, during the peak of the Canadian & US harvest. Canada produces over 20% of the global oat crop, followed closely by the United States, where oats are grown primarily in northern states from Wisconsin to Montana.

Despite bringing in a large crop this year, farmers have not been selling much of their oats and holding them on their farms instead, which is limiting available supplies and helping to boost prices, which stood at $3.34 on Friday.

Although oats are a minor crop in the United States, many corn farmers follow the price of the grain due to an old adage “corn follows oats.” Unfortunately, corn prices haven’t paid attention to the proverb, rising only 3% while oats climbed over 10%.

Crude Oil Slides

Crude oil prices continued to decline this week, falling to the lowest price in three months.

Negotiations regarding Iran’s nuclear program are progressing, decreasing the likelihood of armed conflict in the Middle East. Furthermore, it appears possible that international sanctions against Iran could be lifted, which might allow Iran to increase crude oil exports. Iran is the world’s fourth-largest oil producer, and the return of its crude to global markets could weaken prices significantly.

Meanwhile, the United States continues to increase its domestic crude oil production; by some estimates, the United States could become the world’s top oil producer this year. This has helped to lower domestic prices and lessen dependence on imported crude oil.

Despite the recent declines, US crude oil prices are still historically high due to ongoing supply disruptions and threats in other parts of the world, trading Friday for $101 per barrel.

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.

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Alex Breitinger

 

Breitinger & Sons

Commodity Futures Brokers

219.707.5332

800.411.FUTURES (3888)

www.indianafutures.com

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