Commodity Futures File by Alex Breitinger en-us Budget Cut Takes Aim at Agriculture The White House’s proposed federal budget includes a $38 billion cut for farm support, the bulk of which rests on a $29.5 billion cut of the federal crop insurance program. Many farmers showed their distaste for Trump’s new budget including the American Soybean Association and National Corn Growers Association which said in a statement, “Targeting the federal crop insurance program is extremely short sighted. It is especially harmful during an extended period of low... Fri, 26 May 2017 15:47:27 -0400 Dollar Drops on Trump Scandal The U.S. dollar and stock markets plunged this week as political scandals swirled in Washington, threatening to derail the Trump administration’s agenda. After President Trump’s election in November, the stock market and U.S. dollar have largely been climbing on expectations of a stronger U.S. economy, a friendlier tax environment, increased infrastructure spending, and higher interest rates. However, after the turmoil of this week, investors feared that political chaos may... Fri, 19 May 2017 11:14:47 -0400 Silver Strikes New Low Silver prices have been mining out new lows over the last month but may have finally bottomed out after striking $16.00 per ounce on Tuesday. Prices fell from recent highs near $18.60 as investors grew fearful of further Federal Reserve interest rate hikes as the U.S. economy is showing increasing signs of strength. Higher interest rates make other investments more appealing than metals that don’t pay interest. For the third time in the last year, prices dropped toward $16,... Fri, 12 May 2017 14:41:15 -0400 Wheat Storms Higher after Snow Last weekend, a massive snowstorm dumped up to 20 inches of snow on western Kansas and nearby states. This late-season storm devastated wheat fields as snow smashed emerging plants and below-freezing temperatures threatened to damage plant growth. Kansas grows 20% of the U.S. wheat crop, and this storm could reduce production by over 50 million bushels. The extent of damage is unknown so far, but crop watchers are scrambling to assess the destruction. Markets initially exploded on the... Fri, 05 May 2017 16:17:06 -0400 Beef Slices Higher Cattle futures charged over $1.30 per pound this week, reaching a 12-month high. Cattle are rallying as steer weights decline and beef export sales continue to boom. Alongside rising beef prices, cattle producers received more great news this week as corn prices fell near a six-month low. Cattle are predominantly fattened up on a diet of corn, making grain costs a major concern for producers. This week’s drop, combined with the rise in cattle futures, are creating significantly... Fri, 21 Apr 2017 16:04:18 -0400 Commodities get Trumped Up Virtually all commodity and currency markets shot upward this week as President Trump stated on Wednesday that the US dollar was “getting too strong.” Gold and silver rallied to new five month highs as the President stated he would prefer the Federal Reserve keep interest rates low and left open the possibility of re-nominating Federal Reserve Chair Janet Yellen once her tenure is over next year. His favoring of a weak U.S. currency and lower interest rates should be bullish... Fri, 14 Apr 2017 13:36:29 -0400 Gold Soars on Syrian Strike Gold and silver exploded on the news of Thursday night’s massive missile attack on a Syrian air base. Speculators and investors, recently enamored and enriched by precious metals, scrambled to buy more of the asset group which typically outperforms during periods of uncertainty, inflation, and military conflicts, all of which converged this week. Gold and silver blew over highs not seen since early November, trading Friday for $1275 and $18.35 per ounce, respectively. Though many... Fri, 07 Apr 2017 11:00:00 -0400 Record Soybeans to be Planted Soybeans plummeted on Friday following new USDA projections expecting U.S. farmers to plant a record 89.5 million acres of soybeans this year. This news was coupled with relatively high stockpiles of beans, another factor that undercut prices. In the aftermath of the report, soybeans dropped under $9.50 per bushel for the first time since last fall. Meanwhile, corn and wheat prices held steady as acreage projections for those grains were reduced. Unlike corn and wheat, crops that U.S.... Fri, 31 Mar 2017 13:17:02 -0400 Stormy Outlook for USDA Under President Trump’s budget proposal for 2018, the USDA would see a sharp 21% decrease in funding. This news was initially met with trepidation by rural communities, but the plan is unlikely to have as severe an impact as the topline number might suggest. The proposal only impacts the USDA’s discretionary budget, which is less than one-fifth of the USDA’s overall budget, leaving major programs like crop insurance and food stamps largely untouched. However, the... Fri, 17 Mar 2017 13:19:46 -0400 Oil Drills New Low Oil broke to a three-month low on Friday, dropping under $49 per barrel as the market struggles with oversupply. Prices are falling as U.S. shale oil drillers have increased production while U.S. imports of oil rose as well, swelling U.S. oil stockpiles to record highs. Shockingly, oil prices are dropping even as OPEC has maintained its production cuts and geopolitical threats swirl around the world. Under normal conditions, the recent missile tests from North Korea and Iran would spark a... Fri, 10 Mar 2017 14:53:19 -0500 Bio-Fueled Grain Rally Corn and soybean prices exploded on Tuesday on rumors of a new deal to change regulations surrounding biofuels. The plan was submitted to the White House by the Renewable Fuels Association and Carl Icahn, a billionaire investor and Trump adviser. The deal would curb foreign imports and boost demand for domestically-produced biofuels like soy-based biodiesel and corn-based ethanol. At the Chicago Board of Trade, the biggest gainer was soybean oil, which is used to produce biodiesel; that... Fri, 03 Mar 2017 13:17:27 -0500 Gold and Silver Streak Higher Gold and silver continued rallying this week, reaching the highest level since early November. Prices are exploding on political uncertainty, both in the U.S. and Europe. Some traders are concerned that President Trump’s economic policies could spark inflation, boosting demand for precious metals, which are typically seen as a safe haven against rising prices. After Great Britain voted to leave the EU last year, other Europeans have been pushing to leave as well. In France,... Fri, 24 Feb 2017 13:10:43 -0500 Heat Wave Deflates Gas Prices Natural gas prices are collapsing, reaching a three-month low near $2.83 per million British thermal units. The market is selling off as temperatures across the U.S. are projected to be 15-30 degrees warmer than usual this weekend, sapping demand for the heating fuel. Overall, this winter was extremely warm; the National Oceanographic and Atmospheric Administration (NOAA), estimates that heating demand for natural gas is nearly 20% below average. Without significant heating demand,... Fri, 17 Feb 2017 13:37:57 -0500 Copper Strikes a New High The copper market is red-hot, nearing a two-year high on Friday at $2.77 per pound. Prices are exploding on news that the world’s largest copper mine is shut down due to a labor strike. Workers at the Chilean Escondida mine are asking for higher wages and have threatened to stop work indefinitely until their demands are met. Chile is the world’s largest copper producer, and this one mine accounts for nearly 5% of global output. While few Americans keep copper as an investment,... Fri, 10 Feb 2017 14:28:18 -0500 Lumber Knocks Higher The trade in wood has been good to the bulls recently, with lumber futures reaching a two-year high this week. Prices are exploding as the U.S. wrestles with a looming shortage of the building material and rising construction demand. Much of the lumber used in the United States normally comes from Canada, the world’s largest exporter. That supply could be threatened by an expiring trade deal, resulting in tariffs being levied against Canadian lumber. So far, the U.S. and... Fri, 03 Feb 2017 10:06:43 -0500 Border War Escalates with Mexico This week, President Trump reaffirmed his plan to construct a physical wall along the Mexican border and proposed using a 20% tariff on Mexican imports to pay for it. These statements caused Mexican President Enrique Peña Nieto to cancel an upcoming visit to the United States, where the two leaders were expected to discuss the North American Free Trade Agreement (NAFTA). A tariff would cause prices for imported goods to rise, including Mexico’s major exports, vehicles and... Fri, 27 Jan 2017 13:31:30 -0500 Beans Explode The USDA updated its estimate of last year’s soybean crop on Thursday morning, revising the crop size downward by 1.1% to 4.307 billion bushels. This news was especially jarring to the market, which expected this estimate to show an even larger harvest. While the 2016 soybean crop was still the largest in history, this downward revision sparked concerns that U.S. supplies may not be as ample as once thought. These fears sent beans on the largest one-day rally in months, gaining nearly 30... Fri, 13 Jan 2017 12:39:21 -0500 Platinum & Palladium White Hot Platinum and palladium had a searing start to 2017, each gaining over $70 per ounce in the first four days. The two metals are tied closely to the auto market, as they are predominantly used in catalytic convertors to reduce pollution from trucks and cars. This week, news broke that U.S. auto sales revved higher again in 2016, climbing for a record seven straight years. Americans flocked toward new vehicles as gasoline prices stayed low again last year, often selecting larger SUVs and... Fri, 06 Jan 2017 13:47:40 -0500 Winter Beverages Warm Up As families circle around Christmas trees, fireplaces, and tables this weekend, they will likely have a warm drink in their hands. As a wonderful year-end gift, commodity markets are delivering lower prices for these drinks, as coffee, cocoa, and sugar prices are all falling just in time for the holidays. Cocoa prices are leading the way down, touching 3-year lows as global supplies are vastly outpacing demand. The Ivory Coast and Ghana, which account for 60% of global cocoa output,... Fri, 23 Dec 2016 18:34:18 -0500 2017: The Year of Rising Rates? On Wednesday, the Federal Reserve raised interest rates in a move that was widely expected, taking the short-term Federal Funds rate up to 0.75%. More surprisingly, the Fed raised its long-term expectations for interest rates, indicating that they expect to raise rates another three times in 2017, essentially doubling short-term rates. The Fed is returning interest rates to normal levels after years of near-zero rates that were in place to stimulate the economy by making borrowing... Fri, 16 Dec 2016 17:19:51 -0500