A powerful blizzard across the Great Plains stranded pre-holiday travelers and wreaked havoc on the cattle market this week. Three-foot high snow drifts closed roads in cattle-rich Oklahoma Tuesday, causing headaches for both last-minute shoppers and ranchers who were unable to truck their cattle to terminals. With animals stuck in feedlots, a resulting supply scare caused cattle futures to explode three cents per pound -- the maximum allowable single day move allowed by the exchange.
The mid-week rally gained traction Friday as traders predicted that a slow-but-steady economic recovery would prompt consumers to spend more money on beef products in the coming months. As of Friday morning, February cattle futures were trading at $1.24 per pound -- up 5.5 percent from a December 12th low.
South American Heat Drives Corn Up
Deteriorating crop conditions in Argentina and Brazil were seen as threatening the 2012 South American crop, causing a rally in corn and soybean futures. Experts report that only 72 percent of the Argentine corn crop has been planted this year. This is seen as significantly behind schedule. Hot and dry conditions were predicted to continue to stress crops over the next week. Soybeans in southern Brazil are also struggling due to lack of moisture. Agronomists blame the dry conditions on "La Nina" -- a weather phenomenon known to cause drought in South America and excessive moisture in Australia.
South American markets continue to exert greater degrees of influence over U.S. grain prices as yields increase south of our border. In fact, many Midwestern farmers for whom domestic land values have become prohibitively expensive have decided to uproot operations and head for cheaper South American pastures. As of Friday morning, January soybean futures were trading at $11.65 per bushel, up 27 ĺ cents on the week. March corn futures were trading at $6.21 per bushel, up 34 ĺ cents on the week.
Unrest Fuels Crude Rally
Concerns over the violence in two of the world's top oil producing states sparked a rally in the crude market. Clashes between workers and police forces in oil-rich Kazakhstan left 16 dead in an oil town late last week. Thursday, a series of bombings left scores of victims in Iraq. Iraq is estimated to have the fifth largest reserve of oil in the world. As of Friday morning, February crude was trading at $100 per barrel, up $6.25 on the week (6.65 percent).