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Paragon Investments' Futures File: Oil, Cattle & Palladium Higher

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Oil and Fuel Prices Surge

Oil prices gushed to a seven-month high on Friday as the market absorbed a tighter supply outlook. Saudi leaders have indicated that OPEC and other nations will continue curtailing petroleum production, which should keep a lid on global supplies and keep prices elevated.

Meanwhile, rising American demand for gasoline and diesel fuel has cut into supplies which have been tightening for weeks.

These factors pushed oil futures near $54 per barrel for the first time since March. As oil climbs, fuel prices are coming along for the ride, with gasoline prices jumping 20 cents over the last month.

Investors Stampede into Cattle Market

Investment funds have been piling into the cattle market, which is driving futures into new highs. This move comes despite recent news from the USDA that cattle herds are swelling, which could lead to a backlog of beef next year.

For consumers, this action could lead to unwelcome high prices at the store, but investor demand is great news for cattle producers who are looking at fat profit margins at current levels. Higher cattle prices and cheap corn (a major input costs for beef producers) are a welcome relief after months of unprofitable prices.

To fully capture the current profitability, producers can pre-buy their corn needs and pre-sell the cattle theyll take to slaughter next year, locking in the current values through futures contracts, which stood at $3.48 per bushel and $1.20 per pound, respectively, on Friday.

Auto Industry Charges Palladium Prices

Palladium prices topped $1000 an ounce for the first time in sixteen years as demand for the metal has been rising sharply.

Over 75% of the demand for palladium comes from the autocatalyst industry, where the metal is used to clean up emissions from gasoline vehicles. In recent years, demand has been rising as developing nations, especially China, are implementing more clean-air standards.

Palladium has more than doubled since early 2016, and got another big boost over the past few months as Hurricanes Harvey, Irma, and Maria damaged over a million vehicles in their wakes. This massive upheaval in the auto industry should spark a new wave of car-buying and demand for palladium-containing catalytic convertors.

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About the author

With a degree in Grain Science / Management from Kansas State University, Mr. Haverkamp has worked directly with and for several corporations in research, logistics, and origination of commodity products. Among these are Continental Grain, Kansas Wheat Commission, National Livestock Association, Kice Industries, and Land 'O Lakes. Mr. Haverkamp is a regular guest analyst on both radio and television programs throughout the Midwest and also provides fundamental and technical research for Bloomberg, DTN, Dow Jones, The Wall St. Journal, CNN and CNBC as well as several other local and regional news syndicates. Mr. Haverkamp sat on the board of directors for the NIBA (National Introducing Brokers Association) in Chicago for five years and on the National Futures Association's nominating committee for one year. Mr. Haverkamp began trading in 1987 and founded Paragon Investments in 1996. 

  Mr. Haverkamp continues to provide consulting services for individual investors, livestock operations, grain processors, and individual producers as well as holding the title of CEO for Paragon.

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