Meat lovers may soon be wishing that they had stocked up on Memorial Day pork specials, as hog prices exploded to a 20-month high this week.
Demand for pork has been rising recently as the summer grilling season begins, which helped boost prices by over 6% this week, proving that pigs can fly.
Meanwhile, some investors swept into the hog market on a belief that prices typically bottom out near Memorial Day and rally through mid-July, adding to this week's buying frenzy.
As of midday Friday, July hog futures traded for 86 cents per pound.
Weather Chases Grains Higher
After a too-wet spring, crop watchers are now starting to worry about the prospect of a summer drought hurting US corn and soybean crops. When corn and beans are planted in excessively wet ground, they develop shallow root systems, making them especially susceptible to dry weather later in the season.
Meanwhile, wet conditions are damaging the South American corn and soybean crops, reducing yields and delaying harvests. Brazil and Argentina are two of the world's major sellers of the crops, and reduced production from those countries will create even more demand for US grains.
As a result, corn prices neared a one-year high at $4.15 per bushel and soybeans shot near $11.70 per bushel, the highest price in almost two years.
Gloomy Economy Hardens Gold
On Friday, the US government shocked markets with a dismal jobs report. The monthly non-farm payrolls figure showed that only 38,000 jobs were added during May, the worst month of job growth in five years. Over the last year, the economy had been adding nearly 200,000 jobs each month, making this report either an aberration or a sign of trouble to come.
Upon seeing the terrible figure, investors immediately began buying gold and silver contracts on the expectation that the Federal Reserve will be forced to keep stimulating a now-faltering economy. The Fed will likely keep low interest rates longer, which makes gold a more attractive investment. This helped gold rebound over $40 per ounce from its low earlier this week, trading midday Friday near $1240.
Despite Friday's disappointment, the rest of this week's economic data showed steady price and wage increases, a strong housing market, and unemployment at an eight-year low of 4.7%.