October lean hogs, traded in Chicago, reached contract highs on Friday at 78.65 cents per pound. This rally has been driven by hot temperatures and tight supplies. Sweltering weather causes the animals to gain less weight and prevents producers from transporting live hogs during the dangerous heat. Additionally, the amount of frozen pork bellies (the source of bacon) in storage is at one-half of last year's level.
These "bullish" factors have pushed the hogs sharply higher over the last two weeks, with pork prices rising over 4 cents per pound (+6%).
Coffee Futures Jolted to 12-Year Highs
Coffee prices ran up to $1.78 per pound early Friday morning, reaching prices not seen since 1997. This rally has been fueled mainly by low global reserves, as demand has caused supplies to dwindle to their lowest level in 10 years. This year's production may also be threatened in Columbia where excessive rains are damaging plants during their flowering stage. Columbian coffee accounts for 16% of the high-quality Arabica coffee that Americans drink every day, which has caused buying interest in the coffee futures market.
Over the last six weeks, coffee futures prices have buzzed 46 cents/lb (+35%) higher. The recent price appreciation has attracted speculators and investment funds to trade coffee, rousing the normally sleepy market. After pushing the market to 12-year highs on Friday morning, coffee-trading "bulls" are hoping that prices will rise towards $2 / lb.
Wheat Keeps Climbing
Wheat futures continued their upward track this week, rising on Friday to 14-month highs.
The wheat market continues to focus on global supply issues, especially the dry conditions in Europe and the Former Soviet Union. Recent price gains and problems with foreign crops have boosted American exports to foreign markets like Japan, Egypt, and Nigeria. Over the last two months, the wheat market has burst upward, rising $2.30 per bushel (+54%).